Lord Davies of Oldham: My Lords, I should start by reiterating that, in drawing up our plans for the future of the BBC, the Government have kept two key objectives in mind: to make sure that the BBC can keep pace with technology and harness its potential to service licence fee payers even better; and to reconnect the BBC with the citizens it serves, and who pay for it through the licence fee.
	In terms of the process, no charter review has been as open and transparent as the one we have been undertaking. This debate, and the one to follow shortly in the other place, represents another chapter in this process. Over that time, the public, industry and Parliament have all had the chance to put their views and concerns to the Government through a variety of means, including online, in print, at meetings and in person to Ministers. The Government have undertaken three separate periods of public consultation at key stages in the process, to which more than 10,000 people have contributed. There have been around 100,000 unique visitors to the website; we have commissioned a number of carefully targeted pieces of research; and we have participated in debates in this House and the other place. We have also sought to co-operate fully with the three Select Committee inquiries, all of which have served to inform the outcome that we are discussing today.
	It is true that we received far fewer responses on the latest consultation than to previous ones. That may indicate a degree of satisfaction with the broad outcome, although it is clear that for many in the sector, the proof of the pudding will be in the eating. But as Michael Grade has said on more than one occasion, one needs only to skim the new charter and agreement to get a clear sense of the strength of the new framework we have put in place.
	It has become clear as the charter review process has progressed that the BBC's role is more important now than it is ever been. If we want the United Kingdom to stay at the forefront of the technological revolution, with all the benefits that society and industry may take from that, then the public need to have access to the latest developments and be actively introduced to the possibilities which they present. The BBC has a critical role to play in this. It is not, of course, a new role—the BBC has, since its establishment, taken a leading role in opening up the benefits of new technology to mass audiences and in being the "trusted guide". But the BBC has a balance to strike. We need a BBC that continues to fulfil this traditional, transitional role at a time when much is changing—and changing fast—and builds on that by continuing to deliver services that keep pace with the rapid tempo set by technological change. We need a BBC that continues to serve licence fee payers better than it has ever done by being more accountable to them than it has ever been. If the BBC is to remain relevant and requisite in an era when audiences can choose from a myriad of different channels and services, it needs to know what its audience wants and be able to respond.
	We are confident that what we are proposing in the charter and agreement will enable the BBC to continue to provide the kind of high quality public service broadcasting we have been accustomed to, while ensuring that it continues to deliver value for money. We are confident that the new structures and arrangements will deliver the checks and balances that the industry has sought, as well as delivering unprecedented levels of accountability to the licence fee payer. We are confident that what we are proposing will deliver a BBC with the flexibility to prepare for the next decade.
	However, there is more to consider. The BBC has to operate in a market without strangling or unduly compromising the competition that is already there. It has to be clear about what it can and cannot do, and where the boundaries lie. It has to be strong and independent of government, at the heart of public service broadcasting but not at the expense of its competitors. These are very real concerns, and they are tackled head on in the charter and agreement.
	I should make it clear that the charter and agreement, the drafts of which were published alongside the White Paper in March, are the tools that are used to set out what the BBC's obligations will be for the period of the next charter, and that they encapsulate how the BBC will operate over that period.
	The drafts before the House specifically include arrangements for making a smooth transition from the current system of governance to the new one. At the heart of these arrangements is an understanding that it will not be possible for there to be a totally clean break. The transitional arrangements are designed to be clear about who is responsible for running the BBC at any particular point. So, although the trust will be appointed before the cessation of the governors, their duties and authority will be limited essentially to those necessary to appoint the executive board and carry out reasonable preparatory work. The key date in the transitional period will be that on which the existing governors cease to be and the trust assumes its full responsibilities.
	Turning to the issues, we made it clear, on publication back in March 2005, that the Green Paper was firm on a number of key issues: how the BBC should be established, how it should be funded and how it should be governed. But it also went on to seek views on a number of other important issues. The White Paper, and accompanying charter and agreement, fleshed out in more detail the proposals where the decisions had already been made, and went on to make clear for the first time our decisions in these other areas.

Lord Davies of Oldham: My Lords, I do not have a date for that at the moment, but it is an important part of the new constituent arrangements and will take place before the trust comes fully into operation. It is part of the transitional arrangements. I cannot give the noble Lord a precise timetable. I am trying to indicate to the House the process of overlap.
	With the Green and White Papers, draft charter and agreement, debates and Select Committee reports before us, we are all familiar with the key issues and the Government's proposals. That is why I do not propose to go into a lot of detail in my opening statement today. It would be both a waste of time for the House and presume too much for me to spell out what informed contributors to this debate know all too clearly. However, I need to set the scene.
	On governance, the charter and agreement address the conflicts of interest that were thrown up by a system in which the BBC governors were designated both defendant and jury, by abolishing the governors and replacing them with two new, formally constituted bodies: the trust and executive board. The charter and agreement confirm the BBC as a broadcaster of scale and range and charge it with continuing its role as a trusted guide bringing audiences the benefits of new technologies. They also confirm the range of purposes and characteristics set out in the Green Paper.
	The charter and agreement confirm a number of Green Paper policies, including: every BBC service having a service licence; the public value test as a means of approving new services, and the trust's role in carrying out the public value test; as well as the Secretary of State's procedural veto.
	The charter and agreement address the need for wider market protection by reiterating the need for a new fair trading regime that will cover the BBC's publicly-funded services as well its commercial services, and setting out the need for a new fair trading complaints procedure.
	I should say a little about the proposed role for the BBC in assisting the process of digital switchover and funding the help. I acknowledge that there are criticisms of the proposals in this area. I can assure the House that we carefully considered all the arguments, including the Select Committee reports, and the specific one on digital switchover. The Government remain convinced that their decision is the right one. The issue is how to make switchover happen in a way that is both systematic and fair, particularly for the most vulnerable. As I said earlier, the BBC has consistently led from the front when it comes to technological change, and if we want the BBC to continue in its role as a trusted guide to new technologies, it is only natural for us to look to the BBC to play an important role supporting the switch. It is a broadcasting cost, and the licence fee has always been a way of delivering broadcasting policy objectives. For that reason, it is fully appropriate for the BBC to lead on the switchover process and for help schemes to be paid for out of licence fee money.
	On the subject of switchover, there has been some speculation about the role that the Government see for Channel 4 in the new digital Britain. We believe that Channel 4 has a vital role to play, complementing the BBC, in the provision of public service broadcasting, and, as we said in the Green and White Papers, we are exploring a range of options for specific forms of help to assist Channel 4.
	I have kept my opening remarks to the minimum in providing a context for this debate, all too well aware that there are many distinguished contributors, all of whom know these issues thoroughly. However, the success of the new arrangements, built on the new BBC trust and executive board, will be determined by a consensus, not only among licence fee payers but also among industry, that the BBC is indeed helping to make the UK environment one where both it and commercial broadcasters can flourish. We believe that the charter and agreement provide the framework for the BBC to deliver that outcome. I beg to move.
	Moved, That this House takes note of the drafts of the BBC's new charter and the agreement between the Secretary of State for Culture, Media and Sport and the corporation.—(Lord Davies of Oldham.)

Lord Fowler: My Lords, this is the third report of the Select Committee, which the House will be relieved to know is rather shorter than the previous reports. I know that all noble Lords here will have studied them with extreme care. This will be the last report of the BBC Select Committee, which was appointed on an ad hoc basis. Therefore, I take the opportunity to thank the members of the Select Committee for their exceptional support. It was an exceptional committee and it was a great privilege to be chairman of it. Following our debate on Wednesday, we shall have to wait to see whether it will be followed by a permanent Select Committee on the media, which I strongly believe would do justice to the importance of this area.
	On Select Committees generally, it is most important that they are cross party and not party political—and ours was no exception to that. Fundamentally, their role is a questioning role. That is their nature, and anyone who thinks otherwise does not really understand the parliamentary process. We are not cheerleaders, and in our reports we have raised a range of questions about the BBC, to which I shall come. I make absolutely no apology for that, but let me put our comments in this context—that I am a great admirer of the standards of the BBC in its programme making and news reporting. That was the view of committee members generally. At times we talk glibly in this country about companies that are world leaders, but in broadcasting the BBC is an undoubted world leader.
	In particular, I think of the radio and television reporters who manage remarkably well to provide balanced reporting both at home and overseas, where they have an unrivalled number of foreign news bureaux. Over the years of course they have been accused of political bias one way or the other. As a former chairman of the Conservative Party, I can only say that that has never been my experience. I find that most of the critics do not want balanced reporting; they want reporting that is slanted their particular way. By far the bigger danger is in pressure brought by government—and here I refer to any government—on the reporting process and on reporters and producers.
	In some ways, the jewel in the crown of the BBC is the World Service. In the months when we have taken evidence, witnesses have predominantly spoken in admiration of the service. Again, it is the balanced reporting and range of reporting that is admired. It is the highest praise you can give a media company that you can actually rely on it. The extraordinary thing is that we do not make even more of the World Service. It is about to launch a new Arab-language television service in the Middle East. You might think that nothing is more important than to have those objective standards and that they should be brought to the political debate there, but extraordinarily the World Service is being denied the resources to run a 24-hour service, which it wants, and will have to make do with a 12-hour service instead. So starting from behind the line, the service is still held back. How much would the extra cost be to have a 24-hour service? How much would the Foreign Office, which supports the World Service, have to pay to have a 24-hour service? It would be an extra £6 million. I think that one of the richest nations in the world should just be able to afford that kind of bill.
	In no way does the committee approach the BBC in a spirit of hostility, but our three reports—and in particular the third report—highlights one fundamental concern lying behind much of what I think is wrong. That is the BBC's inadequate accountability to Parliament. On Radio 4 there is an admirable programme called "File on 4", which investigates particular scandals, big and small, that it has uncovered. It usually begins with a BBC journalist trailing the contents of the programme with words like, "We reveal a company that is bypassing its standards", or, "We discover a plan to disguise money-raising", or "We find fat cat salaries". The noble Lord, Lord Bragg, would do that sort of introduction much better than I can. However, I sometimes think that it is a great pity that the producers do not turn their attention to the BBC itself, for they would reveal a public corporation almost entirely unaccountable to Parliament, although with an annual budget the size of that of the Department for International Development.
	If the producers of "File on 4" conducted such an investigation, they would discover a government plan to load social costs—they are not broadcasting costs, they are social costs—on to the licence fee payer, rather than on to general taxation, where such a cost would customarily go. The licence fee is a regressive tax, in fact. They would also find that some of the payments now being negotiated could well lead to an upward, inflationary spiral, all financed by the poor old licence fee payer.
	On accountability, we should be quite clear what the position is. In agreeing the charter and setting the level of the licence fee, the Government simply have too much unchecked power. We are now at the end of the process with the charter; there will be no Bill presented to Parliament and no consideration in committee. The public may be paying for it but the charter is a deal between the Secretary of State on one side and the chairman of the BBC on the other, and the deal has now been done. The Minister has just said that the public can put their views. The public did put their views, but I am bound to say that it did not make a great deal of difference to the general outcome—nor did the Select Committee or virtually anything else. But the point is that Parliament can do absolutely nothing to change what is now proposed.
	To be blunt, this very debate illustrates the complete irrelevance of the parliamentary process. You could not do worse than to arrange a debate on a Friday, without a vote. But even under these circumstances, I am delighted to see so many speakers and so many of your Lordships present, as it shows the interest in the subject. However, the reality has to be faced, whether the debate happens in the Commons or the Lords, that there are no meaningful consequences from it. The charter is not placed on a statutory basis, which has inevitable consequences; it means that Parliament will be unable to decide on a range of important issues. It will be unable to decide on the new proposal for the board of trustees to replace the governors, which is a proposition almost universally criticised by outside bodies, including the Government's own advisers. Indeed, Parliament is so irrelevant in that process that the recruitment process is already under way for bringing in the new trustees and started even before the Commons or the Lords had even debated the matter.
	It means, too, that Parliament will be unable to decide whether it is right to put the costs of helping the vulnerable with digital switchover on to the licence fee. The Government call it a broadcasting cost—and the Minister has just said that; but free licences for the over-75s is a social cost paid for by the general taxpayer. My guess is that if the Government put their proposition to Parliament, they would be defeated. Virtually no one I have heard pretends that it is a very good solution; it is simply a not very skilfully hidden tax.
	Parliament will also be unable to consider whether it would be right for the BBC to be charged for the use of spectrum, which it never has been before—a change that would come straight from the pockets of the licence fee payer. It will also not be able to consider the issue of whether some of the licence fee should be used for public service broadcasting outside the BBC, which is an increasingly important issue. There will not be one view on a question like that, but what one cannot deny is that it is an important question. Yet to all this, the Government say they have followed precedent—that it has always been done like this. I am bound to say that if we followed that advice, we would still have the Poor Law in this country. Indeed, most of the injustices that the party opposite came into existence to change would also still be present. Let me emphasise that this is not a party point that I seek to make. My criticism would be the same or even rather severer if my own party were in government and proposing these things.
	You might say that some of these issues will be taken up in the licence fee debates, but again that is not the case. There is no realistic debate. It is true that an order is put before Parliament, but it is done only on the basis that it is accepted or rejected; it cannot be amended. We cannot say yes to the licence fee but no to loading on the social costs of digital switchover.
	I do not argue for a Bill each year, but I think that at the start of a process where the proposition at present is that the licence fee should rise by RPI plus 2.3 per cent for the next seven years there should be proper discussion and Parliament should be able to change what is proposed. We are talking of a cost of £3 billion a year now rising to a cost of £4 billion a year. Parliament, particularly the House of Commons, has every right to think that it is the guardian of the licence fee payer's interests.
	Again, to be clear, the committee believes that the proposal of RPI plus 2.3 per cent is too much. The licence fee has been increased by an unprecedented amount over the past few years. Costs are being loaded by Government on to it which should not be included, and the BBC itself has been making claims such as the initial claim on the cost of the move to Manchester which was not justified.
	What would be very helpful, and helpful for the public, is if the National Audit Office could be involved in scrutinising the BBC's bid and given generally a wider role. Indeed, I cannot understand the argument against that. The NAO has all the necessary experience. It is nationally respected and would provide an objective and non-political assessment of the bid. It already, and perhaps most crucially, looks at the BBC World Service without any complaint; indeed, the BBC World Service says that it is very helpful. The NAO could examine the costs of the BBC; it might even include some of the salaries now being paid. I notice that I am not alone in expressing concern here. None other than Jack Straw, the Leader of the Commons, gave it as his view that newscasters who "prance around" the studio—I use his words—were "paid too much". If that is the view, the Government have the solution in their own hands. If they turned this issue and issues like it over to the National Audit Office, then we could at least have some check.
	I think that some of the fees and some of the salaries—I express a personal view—now being paid lead to a number of questions. Clearly there is a market and a perceived market price, but something like £18 million for a contract over the next three years for Jonathan Ross seems to me to be in danger of creating its own inflation not only in the BBC but also in the television area generally. Frankly, it goes against the grain that no one can find £6 million to finance a proper television service to the whole of the Middle East when amounts of that kind are being mentioned.
	The Government's reply, repeated remorselessly by the Department for Culture, Media and Sport press office at the weekend, is that their opinion research shows that the public do not want any further parliamentary checks. It is an entirely bogus point, based on one question in a MORI survey in which the public were asked:
	"Do you know who, if anyone, is responsible for making sure that services provided by the BBC are of an acceptable standard and who of these, if anyone, should be held to account when things go wrong?"
	We are not suggesting, on questions of decency, taste and quality of programmes, that Parliament should have a role. I believe, however, that the results of the poll would have been a little different had they asked the question: "Do you think that the BBC, which has a power unique to other public bodies to levy money, should be free from normal accountability to Parliament?". I think that you might have got a slightly different reply on that basis.
	The great irony is that what we propose would not weaken the BBC; it would strengthen it. It would benefit from objective examination by the NAO, both internally and in public perception. It would benefit from proper parliamentary scrutiny and the striking out of items the Government want to load on to the licence fee payer. As it is, we are heading for a licence fee that at the end of the period will cost £180 and the risk that the licence-fee basis for the BBC will be undermined. I think that that is a real danger and one that we should recognise.
	I have one last point. One of our last witnesses was the noble Lord, Lord Birt, following his release from No. 10. He certainly looked back entertainingly, as when he tried to persuade the Foreign Office about the importance of the internet. The Foreign Office apparently did not really believe it would catch on. But he also looked forward as well. Here, one of the issues is the very future of public service broadcasting outside the BBC. However good the BBC is, we do not want a monopoly. Some of the important innovations in television have come from ITV and Channel 4. The question is how such public service broadcasting can be sustained. For there are many inside and outside the television industry who doubt whether it can be sustained on the present financial basis of independent television.
	I do not argue whether that is right or wrong, but I do argue and emphasise that in television and the media area generally we are in a position and a period of profound change. Despite the Foreign Office prediction, the internet has caught on, and there is a whole revolution in the way that news, and much more than news, is being brought to the public. These are vital questions in a democracy and are one reason why I believe they should be kept under review by a permanent Select Committee. But I believe above all that every opportunity should be taken for these issues to be properly debated in Parliament itself and, where appropriate, decided in Parliament itself. I fear that that is not the case at the moment.

Lord Clement-Jones: My Lords, I thank the Minister for his succinct introduction. However, I want to single out for thanks the noble Lord, Lord Fowler, not only for his speech today—a model of clarity—but for the fact that he and his committee, in their three reports, have helped inform the House and the wider public about the issues arising from the charter review. It has certainly concentrated my and my colleagues' minds on some of the issues that the committee has raised. They deserve thanks for their considerable work.
	When the White Paper was published earlier this year, we on these Benches welcomed quite a few of its aspects: the clear statement of purpose, including its worldwide role—and here I definitely agree with the noble Lord, Lord Fowler, on the role of the World Service; increased opportunities for independent television production through the window of creative competition; greater public scrutiny of BBC finances by the National Audit Office; continuation of funding by the licence fee; and a charter lasting 10 years to ensure long-term planning. Our support for some of the elements in the draft charter, now published, and in the agreement continues.
	I also made it clear when the White Paper was published that I am a strong supporter of the BBC, but not uncritical. When I audit my own viewing habits it is clear that they have a very strong BBC flavour. It is not only "Strictly Come Dancing"; it is a whole range of drama, current affairs and news programmes. If all of us audited our own viewing, we would probably find pretty much the same.
	We believe, however, that the test of the new charter and the agreement must be whether it guarantees a strong, independent and securely funded BBC; that it is equipped to meet the challenges of the digital age; that it is strengthened in its independence from government; and also—and I think this is a new element and of particular importance in this day and age—that the BBC behaves in a fair and competitive way. Therefore, in several respects we are disappointed that the Government have not used the opportunity of the charter review to implement more fundamental changes to the face of public broadcasting in the United Kingdom.
	First, the Government have still failed to address defects in the regulation of the BBC. Governance is not being separated from regulation; the Government have simply proposed a transfer of regulatory responsibilities from the present board of governors to a new BBC Trust, with Ofcom having a number of peripheral functions. A truly independent regulator of the BBC is called for. We regret that the Government have not put in place a new and independent regulator tailored to regulate a public service broadcaster. The new arrangements will perpetuate the muddle between regulation and governance. I can do no better than repeat the comments of the noble Lord, Lord Burns:
	"I do not like the idea of a minority of non-executive directors on a management board. I do not like the proposal that the Chairman of the Executive Board should be chosen by the trust. It seems to me that the body responsible for oversight should not be choosing the people it is going to oversee . . . I would have preferred a greater degree of separation so that they were clearly seen as distinct animals rather than being two animals within one organisation".
	What happens when the non-executive members of the executive board disagree with the trust? Who does the director-general work for? Is he answerable to his executive board, the chairman or the chairman of the trust who has appointed him? Further, I agree with the Select Committee that appointment of the BBC chair and its members should be on the recommendation of an independent panel rather than on the advice of Government. Surely, this must be a cardinal aim of the charter review.
	It is common ground between all the parties that the future of the licence fee will need to be questioned, given the likely extent of technological change. At present the obvious course of action regarding funding is to continue with the licence fee in its current form until 2017. The Government have committed to not reviewing alternative funding mechanisms until around the end of digital switchover. We agree with that proposition. It is important that such a review is not conducted until after completion of the analogue switch-off, when the effects of that process will be clearer. As regards the level of the licence fee, due to be fixed, we are now told, in October, noble Lords on the Liberal Democrat Benches have made it clear that we do not believe that it is desirable for the licence fee payer to pay the costs of digital switchover. We agree with what the noble Lord, Lord Fowler, said on that. The costs of digital switchover should be borne out of general taxation.
	A further reason for the licence fee not to increase by more than inflation is to avoid subsidising the BBC for its activities in the digital market. There is concern among the BBC's competitors that any excessive increase in the licence fee will be used to fund the BBC's drive into the digital arena. No unfair advantage should be given to the BBC over its competitors. Nor should the licence fee subsidise regeneration in the regions. The move to Manchester must be made on its own merits.
	Many of us in this House have urged the Government to recognise the importance of using this review not just to secure a strong BBC but to ensure that healthy public service broadcasting competition to the BBC, especially from Channel 4, is maintained. If the licence fee is, however, to pay for switchover, it is vital that the BBC provides assistance—not just considers it, as the Government seem to imply—to Channel 4 with the capital costs of switchover and the allocation of some additional DTT capacity. It is as much in the BBC's own interest to secure a healthy and vibrant public service broadcasting landscape as it is in Channel 4's. Channel 4 is in a strong financial position at present, but as the pace of change in the industry increases, it is essential that we take this key opportunity to do what we can to underpin Channel 4's long-term success.
	Generally, neither the public nor the BBC would be well served by lack of choice and effective competition if the BBC were the only broadcaster strong enough to invest in quality public service broadcast content. The risk of unfair advantage, however, is exacerbated by the way in which the licence fee is set. The Liberal Democrats agree with the conclusion of the Select Committee in its third and final report that the Government currently have too much unchecked power in setting the licence fee.
	Advised by the National Audit Office, Parliament must surely be able to scrutinise the formula agreed between Government and the BBC on the level to which the licence fee will rise. I hope that the Government will take on board the Select Committee's comments. It is not too late and I hope that the Minister will give a nod in that direction.
	On competition and the public value test, we welcome the various mechanisms which are designed to ensure that fair competition is maintained while allowing the BBC to innovate. We welcome the concept of the public value test, the market impact assessment and the new ex ante codes. But despite those mechanisms, the charter and agreement set out that the trust itself will decide whether the BBC can embark on new licence fee funded services, launch new commercial services, significantly change existing services or, indeed, whether a service licence is already so broad that the new activity does not merit any scrutiny.
	Ofcom will have a purely advisory rather than regulatory role in this process in that it will provide market impact assessments to the trust, but the trust will make the final decisions on the public value test. The trust will be both judge and jury in deciding the competitive impact of the BBC on the wider market. The Government claim in the White Paper that that would not be the case, but clearly the trust is in the driving seat on this matter.
	It is hardly surprising that the BBC's commercial competitors are concerned at the lack of independence of the decision-making body, especially when the definition of "service licence" can be so broad—online services, for example—that no public value test will be needed. As currently proposed, there is no independent oversight and no opportunity to appeal the trust's decisions other than by judicial review.
	The Select Committee report recommends that if a market impact assessment indicates that the launch of a new BBC service will risk stifling a new market, the new service should not be launched. The Liberal Democrats agree. The trust should not be able to override any finding of adverse market impact in a public value test.
	The Select Committee also recommends a right of appeal to Ofcom on proposals which have been subjected to a public value test. Surely, this is a minimal measure that the Government should implement. That is also true of the ex ante codes. Is there not a need for a clear process for appeals to a truly independent authority? Should there not be a single, new independent regulator for all public service broadcasters; namely, a public service broadcasting commission? As regards the ex ante codes, all that is proposed is a complaints procedure.
	The window of creative competition for radio is one of the great disappointments in the charter and agreement. Why is this not provided for? The principle for radio is the same as for television. There is no reason why this should not apply to radio. The reasoning in the White Paper is extremely weak. All we shall be left with is a 10 per cent voluntary approach, exactly the same as we have at the moment. I urge Ministers to think again about that.
	I urge the Government to address all these concerns in the final version of the charter and agreement. The BBC and public broadcasting are in the best possible condition to tackle the challenges of the new media age but at the same time must not stifle competition and should encourage independent production.
	In conclusion, I wish the BBC, a precious national institution for more than 80 years, to continue with renewed vigour at the heart of the UK's public broadcasting landscape. If the Government accepted the points that I, my party and the Select Committee are making, that position would be even stronger.

Lord Macdonald of Tradeston: My Lords, I am pleased to follow the right reverend prelate the Bishop of Manchester and his thoughtful contribution, particularly since I spent 18 happy years in Salford, broadcasting to the north-west, and I wish him well in his campaign. I want to focus on how the draft charter and framework agreement might reposition BBC policy towards programming, categorised as covering "religion and other beliefs". I declare an interest as chairman of the Parliamentary Humanist Group.
	The Communications Act 2003 gives the BBC a duty to make programmes on "religion and other beliefs". The Minister in your Lordships' House responsible for broadcasting in 2003, the noble Lord, Lord McIntosh of Haringey, made it clear that those "other beliefs" included non-religious beliefs. I congratulate my noble friend Lord Davies of Oldham and the DCMS for the way that they have handled this always fraught process of charter renewal and I pay tribute to the thorough reviews of the BBC charter conducted by the noble Lord, Lord Fowler, and other noble Lords on the Select Committee.
	In particular, I welcome their recommendation that,
	"the BBC should review its programme output to ensure that it complies with the Communications Act 2003 by providing services of a suitable quality and range dealing with religion and other beliefs".
	Your Lordships' committee calls for the "objective portrayal" of
	"different religions and other belief systems".
	It supports
	"a wide definition of broadcasting about religion and other beliefs",
	and is
	"eager to see more high quality, innovative and thought-provoking programmes emerging from the BBC Religion and Ethics Department".
	All are commendable and easily achieved aims, given the BBC's great resources and expertise in programme production across all areas.
	However, there must be a concern over the commitment of the BBC Religion and Ethics Department to deliver on what I perceive to be its duty under the 2003 Act to give appropriate coverage to "other beliefs", particularly those non-religious beliefs and alternative practices and ethics that daily guide the lives of many millions of secular British citizens, and not just signed-up humanists.
	Incidentally, your Lordships' review remarks rather pointedly on the relatively small membership of the British Humanist Association. Our Parliamentary Humanist Group numbers just about 5 per cent of parliamentarians—perhaps three dozen Members of your Lordships' House to date—admittedly, not a lot. We non-believers traditionally have been an ill-defined and diffident lot, but, across both Houses of Parliament, I have no doubt that we could probably be numbered in hundreds, reflecting in rough proportion the general public who we all strive to represent. Polling suggests that at least 15 per cent, perhaps up to 25 per cent, of the public is not religious, with higher percentages of young people.
	Whichever way you reckon, the views of the BBC's constituency of licence-paying non-believers merits more serious consideration of its beliefs about how best to lead a good life in a decent society. Humanists make no claim to represent all non-religious people. However, the British Humanist Association took it upon itself to interrogate the BBC on the interpretation of its duty to other beliefs, following the Communications Act 2003. The BBC's response is that most existing coverage of ethical or moral issues includes a secular, scientific or technological perspective, as does its history and arts programming.
	In addition, it argues, atheists such as Jonathan Miller and Richard Dawkins presented series on religion, and others such as Philip Pullman and Polly Toynbee appear on programmes such as "Heaven and Earth". That is true up to a point, but, surely, the secular characteristics that inform so much programming are simply the shared assumptions of mature, educated democracies, which, at best, use reason and evidence as the foundation of sensible public discourse. As our religious colleagues would be the first to argue, there is another important dimension beyond that—of values, morality, spirituality and the framework of belief. And it is in that dimension of programming that non-religious, or counter-religious output, is not commissioned systematically in proportion, nor scheduled in parallel, with the large and steady flow of explicitly religious programming across the BBC schedules.
	I am sure that the BBC could point to many very professional, irreligious programme makers happily filling the so-called "God slots". I speak from experience, having first appeared on television some 40 years ago in one of the first religious series, on ITV's "Sunday Break". Subsequently, I had at different times executive responsibility for religious programming at both Granada and Scottish Television. As a non-believer, I worked effectively with my panels of religious advisers from the major Churches and, at times, produced what my clerical friends judged to be reasonably ambitious and successful series—some about ethics, some about social action, some even investigative and exposing paranormal nonsense or fraudulent faith healers. Religious or godless, we seemed to have much in common when it came to right and wrong. So, my argument is that religious and alternative ethical programming can and should co-exist in proper proportion.
	Turning to the draft framework agreement and the new Royal Charter, I look to both to take forward the BBC's duties to "other beliefs": through the BBC's remit to sustain citizenship and civil society and increasing understanding through accurate and impartial analysis of events and ideas; through its remit to promote education and learning; and through its remit to reflect all our communities, promoting awareness of different cultures and alternative viewpoints—always having regard, as the draft framework agreement re-states, to
	"the importance of reflecting different religions and other beliefs".
	A sad truth about television is that in the competitive clamour of news, drama and entertainment, religious programming has lacked status and, indeed, viewers. In truth, some of the programming has been formulaic and perhaps anodyne. That in part explains why, in most recent audience surveys, viewers still put religious output near the bottom of their programme preferences. However, as you will hear the Churches argue, religion is playing an increasingly important role in public life and it is certainly true that many people are increasingly dismayed by the aspects of religious militancy that challenge the values and practices of our democratic, secular societies. That is all the more reason to widen the debate on belief—and in that I hope I would make common cause with the right reverend Prelate the Bishop of Manchester.
	Therefore, I look to the Government to resist the argument that what is needed is yet more of the same religious programming. Religion's role in society is too important to be left only to believers inside or outside the BBC. Those millions of British citizens with no religious commitment, but often with strongly held alternative beliefs, have a right to speak in the same spaces on the same issues as established faiths. We, too, have profound beliefs on how life should be lived, which are well-rooted in ancient belief and hard-won over recent centuries—often in the face of clerical resistance. However, as we have proved in Britain, with the help of public service broadcasting, this can and should be a respectful engagement. The BBC can ensure that. The purpose of
	"Sustaining citizenship and civil society"
	will better be served by getting beyond the exclusive inter-faith dialogues, beyond narrow, shared certainties, to engage with those whose ethical values can surely be aligned to the many positive, tolerant and humane activities of the faith communities in Britain.
	In conclusion, I look in good faith to the new BBC Trust and the new BBC executive board to widen engagement and so enhance the vigour of debate and its range of religious and ethical opinion through the proper and sensible interpretation of the Communications Act, the Royal Charter and the new framework agreement.

Lord King of Bridgwater: My Lords, the noble Lord, Lord Macdonald, will excuse me if I do not follow him on the issues which I know are very important to him and which I had the pleasure of hearing him address when we discussed them in Grand Committee.
	I start by paying warm tribute to my noble friend Lord Fowler. I know that all my colleagues who had the privilege of serving with him thought that it was an outstanding Select Committee and that it did this House great credit. I hope that noble Lords respect that. We attach great importance to the view that there is a genuine role for this committee in the rapidly evolving world of communications. I say that speaking as a former Member of another place, because Members of this House have an independence which, bluntly, Members of the other place do not always have in dealing with the media due to the pressure that can be brought on them and the electoral consequences that they may face.
	I preface my comments with the clear statement—my noble friend Lord Fowler also made this clear—that if we criticise the BBC or the structure, we do so with the honest and genuine desire to support what we consider to be an outstanding and admirable national institution. The comments and criticisms that we make were devoted entirely towards ensuring that it remains so, and that is at the heart of our concerns.
	It would be wrong not to remember where the process started and why perhaps the committee faced difficulties and frustrations as regards a number of what it believed to be well founded improvements and suggestions made in the criticisms on which the Government have refused to budge. It was hugely influenced by the most unhappy saga of events concerning Dr David Kelly, Andrew Gilligan and the resignation of the chairman and director-general of the BBC. There was acute anxiety at the time that the charter review process was about to be embarked upon with no BBC chairman in place and with the need for a chairman to be appointed as soon as possible. Questions were asked about whether those unhappy circumstances and the unparalleled row between the Prime Minister's official press spokesman and the BBC at that time would influence the charter process. History will probably reveal to us to what extent that was the case. I have my own deep suspicions that the problems that we now face and the solution that the Government have put forward may indeed be influenced by a desire to move away from those unhappy circumstances as quickly as possible and, as my noble friend Lord Fowler said, that a deal between the Secretary of State for Culture, Media and Sport and the chairman of the BBC underpins the arrangements that we are discussing today. Following this, our final discussion, this House will then wave goodbye to the matter and will have no further chance to influence events.
	I make it clear that I regard this as a very unhappy arrangement and I hope that my colleagues will excuse me if I repeat what I said in Grand Committee on 27 March 2006. I took the opportunity to quote Sir Howard Davies, who in a newspaper article commented on the Government's proposals at that time. He accurately quoted our report, in which we said that we thought that the,
	"proposals for reforming the governance and regulation of the BBC are confusing, misguided and unworkable".
	He drew attention to the fact that, in evidence to our committee, important features of the proposals were opposed by Ofcom, by Michael Grade, the BBC chairman, by his predecessors, Gavyn Davies and Sir Christopher Bland, by Greg Dyke and by the noble Lord, Lord Burns. He went on to say that, had he been allowed to appear, the noble Lord, Lord Birt, would surely have opposed them, too. The noble Lord, Lord Birt, subsequently appeared before us and, indeed, that was the case. Sir Howard Davies, in his article, went on to ask:
	"How has the government achieved this remarkable full house of opposition?".
	He also said why he believed that such confusion exists and why Sir Christopher Bland is also extremely critical. He wrote:
	"In the light of this devastating and unanimous critique it seems astonishing that the government appears determined to plough on".—[Official Report, 26/3/06; col. GC 249.]
	What we have today is ploughing on.
	I realise how wide the degree of criticism and opposition was. Yesterday, I happened to have the pleasure of listening to the former Cabinet Secretary, the noble Lord, Lord Turnbull, in an interesting debate in this House on the Statistics Commission. I pricked up my ears because in the middle of it—this is a peek behind the curtain of No. 10—the noble Lord, Lord Turnbull, said:
	"Some have argued that the board"—
	that is, of the Statistics Commission—
	"cannot be responsible for both the delivery and the oversight of the system—pretty much the same arguments that led some, including myself, to criticise the new structure for the BBC".
	He continued:
	"In this case, however,—
	that is, in the case of the Statistics Commission—
	"I support the Government's proposals".—[Official Report, 15/6/06; col. 416.]
	What he meant was that, in the case of the BBC, he certainly did not support the Government's proposals, and I am still on the hunt to find anyone other than the Secretary of State, her loyal supporter the Minister and the chairman of the BBC, who has no choice, who supports these proposals.
	Perhaps I may instance why I think we are moving in such difficult country. The Minister kindly allowed me to intervene to ask what was happening about the appointment of the chairman of the executive board. I made a mistake in calling him the chairman of the BBC. I had not read the passage in the draft charter which makes it clear that I should not have done that, because the chairman of the trust may also be known as the chairman of the BBC. However, I then looked at the complaints procedure, which sets out how complaints will be handled in the BBC. In case anyone thinks that they can write to the chairman of the BBC, the complaints section of the revised draft framework agreement states:
	"The Trust should not have a role in handling or determining individual complaints in the first instance".
	The point that many of us made was that we would now have two chairmen and the poor public would wonder who was going to be seen as the chairman of the BBC—as I understand it, as we sit here, we do not know. We do not know when the new chairman of the executive board is to be appointed, or whether he is to be executive or non-executive. If he is to be executive, it has to be the director-general, because that is set out in the conditions of the charter. But we do not know who that will be and we do not know when he will be appointed. I may not have heard the Minister correctly, so perhaps, when he replies to the debate, he will make that clear. The chairman has to be appointed by the trust but, as I understand it, things are going to go ahead before the trust is fully appointed and there will be a shadow situation. I did not quite understand that point. I can see that a bit of scribbling is going on in the Box, so the Minister may have a reply to that point before he makes his winding-up speech.
	I make that point to show that many of us are worried that duplication and confusion will exist. I have already made a mistake myself and I have been considering these issues on the Select Committee for God knows how many months. The point about the public knowing who the chairman of the BBC is going to be illustrates that very well.
	The next shock concerns how the trust members will be appointed. If the Minister does not understand why some members of the committee—perhaps all of us—got frustrated when what we thought were a number of constructive and correct suggestions were continually rebuffed by the Government, perhaps I may deal with the appointment of trust members. We suggested that the chairman of the BBC should be chosen on the recommendation of a truly independent panel; that the selection panel should have a majority of non-political members; that its members should be balanced between those with explicit political allegiances; that it should be chaired by a non-political member who is not a civil servant; and that it should operate according to Nolan principles. We recommended that other members of the BBC board or the BBC Trust should be appointed in a similar manner to that described above. So my mouth fell open when, on 7 June in this House, the Minister, the noble Lord, Lord Davies of Oldham, replied to the noble Baroness, Lady Howe, on what I thought must be broadly acceptable to a Government who claim to be interested in transparency and openness in these matters. She had asked about conforming to those principles and the Minister said:
	"Nolan principles will apply. The selection panel will consist of a DCMS director, the chairman, Michael Grade".—[Official Report, 7/6/06; col. 1256.]
	There is also to be an independent assessor, which I take to mean that he will not actually be on the panel, but that he will assess the work of the other two.
	That is absolutely outrageous. How will people have confidence in the BBC Trust? Some may criticise my noble friend for saying that it always appears that some of these arrangements are a stitch up between the Department for Culture, Media and Sport and the chairman of the BBC. Finding that that is to be the arrangement by which the trust members are appointed, I hope it is not too late, as other noble Lords have suggested, for that to be looked at.
	I want to comment on one point that my noble friend addressed: the involvement of the National Audit Office. In the vacuum of a proper independent assessment of the licence fee and the justification for it, others are joining in. ITV has retained consultants to advise it on the financial justification for the licence fee application by the BBC. The Minister and other noble Lords may have received, as I have, that independent accountants' report, which says, in summary, that the BBC has underestimated household growth revenue, which on its own adds up to £800 million, sufficient to cover the BBC's "overstated" £640 million digital switch-over infrastructure costs.
	I know that the DCMS has used other consultants, perhaps subject to commercial confidentiality—I do not know. I do not know whether the ITV independent consultant is right. In such a situation, is there not a compelling case for having a respected, independent body, of the standing of the National Audit Office, that can conduct an inquiry, so that it is not turned into a battle between outside paid consultants and accountants who are retained to advise the different bodies?
	As regards the involvement of this legislature, we now say goodbye to the BBC charter. I have made a number of criticisms which, as the Minister will know, are echoed by many, much better qualified people than me, commenting on the difficulties and challenges of the governance of the BBC. I recognise that the die is now cast and that the Government are determined to plough on. They have a very heavy responsibility and the chairman of the BBC and the new trust members now have a major challenge. Any organisation, no matter how unwise, ultimately can be made to work with the willingness and the capability of the people determined to address it. I do not believe that the Government have given them the best opportunity to achieve that but, at the end of the day, that is what will happen. I am obliged to say that I hope to goodness that it does not damage the BBC which, as I said at the very start my remarks, is such a valued and admired part of our national institutions.

Lord Ryder of Wensum: My Lords, I declare interests as a former BBC vice-chairman and as a former chairman of commercial radio companies.
	The BBC, for all its foibles, is an institution that enriches all our lives and is envied, as other noble Lords have said, the world over. The licence fee is the only way to secure its future. The Secretary of State has always shared those views and I congratulate her on navigating the charter review reefs with such a deft touch. I applaud the general drift of the drafts of the new charter, with just a single reservation about the nature of the trust.
	When I joined the board of governors, my long-held misgivings about its corporate governance were confirmed in full measure. A minuscule governance and accountability department served both the governors and the executive. The department's staff were appointed by the executive and their future career paths depended on executive patronage. The secretary of the BBC, a key figure over the decades, served in the same capacity for the executive and for the governors. Conflicts of interest abounded at every level. There was no clear separation of powers between the governors and the executive.
	As soon as I became acting chairman of the BBC, with the full support of my fellow board members, including my noble friend Lady Deech, I moved to alter the imbalance of those scales. We agreed to establish an independent governance unit, properly resourced, with a staff appointed by the governors and answerable only to them. We agreed to commission independent external research. We agreed to tap into specialist industry knowledge, independent from the executive.
	Those and other significant reforms worked from the outset. They evolved rapidly and formed the core of the governance chapter in Building public value, of which I declare an interest as author. I believe that those reforms would have withstood the test of longer exposure, although I was, of course, conscious of the strong sound of other voices. From the moment that my noble friend, Lord Burns, and his quango-minded panel proposed a public service broadcasting commission, the Secretary of State was bound to devise a compromise form of governance—hence the trust. I am happy to support its establishment in preference to the Burns doctrine, although I am not optimistic about its longer-term survival.
	However, the DCMS's governance recommendation, specifying the responsibilities of the trust and the executive, cannot be characterised as a separation of powers in the strictest constitutional sense. On that I agree, in part, with the noble Lord, Lord Clement-Jones. The description of the trust as a sovereign body would have raised the eyebrows of Alexander Hamilton and James Madison, the architects of the separation of powers principle. They would not have published the White Paper as a federalist paper.
	Clearly, the concept of the sovereign body was engineered to secure the supremacy of the trust over the executive. That will help to legitimise the trust in the short term, but, as years proceed, we may rue its application. Sovereignty has no gradations. I would have preferred a subtler, less prescriptive approach—an authentic separation of powers. I fear that, in time, the trust, or a future chairman, could interfere with excessive zeal in the administrative detail of the BBC. It will be hard to maintain two boards in watertight compartments with the functions of one defined as sovereign and, at the same time, to avoid the perils of overlapping and, worse still, intrusion into operational matters by the trust.
	Governance by numbers is in fashion. The White Paper does not buck the trend. I tend to share the views of my noble friend Lady O'Neill about this culture. Four years ago, in her outstanding Reith lectures, she argued that new controls on the public sector are more than rhetoric. She declared:
	"They require detailed conformity to procedures and protocols, detailed record keeping and provision of information in specified formats and success in reaching targets".
	In the BBC's case, I hope that these sovereign powers—the key word is "sovereign"—conferred on the trust do not discourage innovation or obstruct creativity, two essentials of broadcasting. But, in the present climate, with all the Government's boxes to be ticked by executives, my anxieties curb my natural optimism.
	The decision on the scale of the licence fee will be made in due course. The BBC has made a bold case, but the Government should be cautious. I hope that they will offer no more than RPI plus 1 per cent. The BBC management has announced thousands of redundancies. These enforced measures reflect as much on present prudence as on past imprudence. Managements change; human nature does not. The temptations for executives in a non-commercial organisation with a guaranteed annual revenue remain unaltered. The Government's generosity should stretch to the shortest sensible limit.
	I fervently pray for the success of the new governance arrangements. I pray even harder for the trust members to retain confidence in their own good sense and the lessons of their own experience, and above all to rely on the sovereignty of their own judgment—the sovereignty that matters most in every field of governance. The BBC, as other noble Lords have said today, is a special British institution. We should all give thanks for its existence, confirmed in the documents before us today.

Lord Bragg: My Lords, this could be a crucial debate for broadcasting in Britain. In my judgment we are at a turning point in the history of what has been an exceptional tradition of broadcasting in this country—I would even venture the word "unique" about what we have had, especially in the area of well funded, on the whole, well made and well scheduled public service broadcasting (PSB) programmes.
	The public service aspect of broadcasting will be the focus of my remarks, and I will proceed by indirections. I will argue mostly via ITV. I declare an interest. I am an executive for ITV running its arts and features department. I am also a contributor to BBC Radio 4.
	In such company as this, my Lords, there is little need to rehearse the reasons for my initial assertion of the potentially momentous nature of developments in broadcasting. We can talk without hyperbole of a sea change, a tipping point, a transformation or even, in some cases, a melting point. There is evidence to support the wildest Cassandra and the most radically prophetic number cruncher. Bob Dylan's "Times they are a changing" are now.
	I congratulate the noble Lord, Lord Fowler, and his committee on their excellent report, which has set a clear, new and important agenda. Like the noble Lord, I, too, am a great admirer and supporter of the BBC, and, like ITV, although independently as well, I am wholly in favour of a strong BBC funded by the licence fee. I hope that this is allowed to thread through the rest of my remarks and be taken as a given. The BBC does programmes no other broadcaster in the world would do, but it is part of a bigger picture. No one system is an island today, not even the BBC.
	I am concerned most of all with PSB. Again, in your Lordships' company I need not spell out what this generally means. PSB has made the British broadcasting experience British. But now, with unlimited channels and increasingly inappropriate regulation, PSB has become a problem. Does public service broadcasting have a future—that is the key question—and, if so, where? The BBC is the best, but it is only one guarantor of the future, although the BBC does many plainly popular programmes and its institutions and corporate imperatives—pre Michael Grade—could appear to engage in what would once have been regarded as off limits commercial ventures—not so easy to couple with its prescribed and traditional Reithian remit and its public service spirit. This causes some legitimate unease.
	I wholly understand that the BBC must reach out to most of the people some of the time. But those, like the noble Lord, Lord Fowler, who have expressed surprise at the recent Hollywood spectacular payments to contributors not transparently core to the public service remit, those who are puzzled by the industrial payments, bonuses and perks give to so many middle and upper management at a time of cuts in the lower ranks and those who question the pre Grade commercial imperialism of the BBC are not to be ignored. I have great faith in the reforming zeal and acuity of my friend Michael Grade, chairman of the BBC, but, as he knows, there is a certain restlessness abroad that the BBC is seen inside and out as rather an unseemly body, feeding on the fatted calf of public money—not too terrible in the great scheme of things, but a touch worrying and indicative to some that the BBC—pre Grade—is losing some of its service identity. The PSB in other areas, I think, will check that. Caesar's wife comes to mind.
	It strikes me as unacceptable that while the BBC and Channel 4 are currently undergoing a review which will examine their public service remit, ITV, which does more PSB than Channel 4 and more than BBC1, has been hung out to dry. It has to wait, according to the latest government information, for another five or six years for its review—a long term. In the long term, as Lord Keynes said, "We are all dead". In my view, which may or may not coincide with that of ITV, there is a very small chance indeed that ITV can maintain anything like the current level of spending on PSB for another five years, should existing conditions develop in the way that most informed critics predict. By the time the then government in 2012 run an MOT over ITV, PSB could be D-E-A-D.
	I think, I say with regret, because I am an admirer of so much of the work done by the DCMS over the past few years, and by its leader Tessa Jowell in particular, that no long-term thinking can have been given to this eventuality. This Government, who have done so much, will, unless they act now, fail through neglect to maintain the crown and purpose of our broadcasting system. If, or when, PSB on ITV shrinks, the British public will be deprived of a fecund resource which has stayed faithful to the seriousness of programmes in so many outstanding areas for more than 50 years. A tradition will be lost and the BBC will be gravely unbalanced, and all for the want of nailing the problem now.
	There is no other commercial channel in the world which even approaches ITV's slate of public service programming. For instance, the national news bulletin and international reports compete with and sometimes even overleap those of BBC1. Its regional news is the most comprehensive in the UK, with 27 regional and sub-regional services. Channel 4 does no regional programmes. Even more investment is going into these regional services despite the advertising difficulties. Almost all it does is originally commissioned programming made in this country. All this helps to support a major part of our flourishing creative economy. In fact, for 50 years ITV in itself has been a flourishing creative economy, employing thousands of skilled men and women throughout the United Kingdom, and especially in Manchester.
	For example, ITV invests around £300 million a year in original British drama. This is more than half of Channel 4's entire budget. ITV seeks and succeeds in commissioning more than 50 per cent of network programmes from outside London. Quite simply, this is under threat. We need a PSB review of all the major channels because it is the only responsible and effective way to address this. PSB, above all in this country, is a single weave throughout the broadcasting system. It does not belong to one channel at all. It will, unless the matter is addressed, result in dividing the channels, one from the other. The delay will cause dilution and eventually dissolution of public service broadcasting on ITV.
	I wish noble Lords could believe that I am crying wolf. I hope that I can convince the House that I am not doing so. For if ITV—again this is my personal opinion—is to survive the new hydra-headed commercial world, it has to get rid of ballast to make it to a home harbour. PSB is the ballast it will get rid of. A recent bid for ITV said that it would succeed when it took over ITV only by cutting the programme budget by 25 per cent. Where do you think those cuts would have come from?
	The situation is exacerbated by the widening gap between the income of the BBC and that of its commercial rivals. It could be argued that in an increasingly relativist world, a still centre of certainty becomes more and more essential. There is undoubtedly something to be said for that, and for the BBC holding that. But if the BBC opens up a chasm in funding between itself and its chief commercial competitors, what is the gain? That is not to tie the BBC down to a leaner licence fee, but it is to argue that the commercial sector needs to be considered and needs restructuring now. If PSB goes from ITV, the system will begin to unravel—rapidly, I think.
	What could a commission do? First, it could reinforce the position of the BBC as the cornerstone of public service broadcasting. Secondly, it could consider some radical options being put forward by serious commentators. For instance, the noble Lord, Lord Bird, former director-general of the BBC and himself a successful and committed PSB broadcaster when he was with ITV, has argued that some of the licence fee should be for public service broadcasting per se, not inviolably dedicated solely to the BBC as an organisation. That is an argument worth having.
	The retiring chief executive of Ofcom, Stephen Carter, said this week:
	"We should have been bolder over ITV".
	He says that he believed that Ofcom could have gone further and removed all of ITV's PSB programmes. Such a move, he argued, would have sharpened the inevitable debate about who would then provide PSB in a digital market. He said that the debate about who was going to do it would therefore have been much more urgent. Those ideas are around.
	I have dwelt at length on that issue because, as someone who started work on the BBC World Service in 1961 and who has worked in the public service area all my life—in the regions, on radio and television for the BBC and ITV as well as in London—I see this as the issue that threatens to get lost in the argy-bargy about deals, percentages and number crunching for the BBC final settlement, which, I repeat, must be fit for purpose. Part of the commission's purpose would be to ensure that other broadcasters have their structures helped so that they, too, would be fit for purpose to continue with their PSB work.
	Like most of your Lordships, I wish the BBC well and intend to continue to support it fully, but the public service broadcasting tradition so uniquely built up must not be wounded or weakened in the process. I think that it threatens to be.

Lord Gould of Brookwood: My Lords, it is with some humility and a great deal of trepidation that I follow my noble friend Lord Bragg. If anyone exemplifies public service broadcasting, it is him—for the BBC and elsewhere. It was a superb speech well made. I congratulate the noble Lord, Lord Fowler, and his committee on their excellent report. This has been a good debate and a serious and timely one.
	I am speaking today hoping to follow on from what was an excellent debate yesterday on political participation. I must say at the outset that I am not an expert on the BBC or on broadcasting and I would not claim for any moment to be able to pronounce with confidence about an institution and an industry which is hugely complex and, for the most part, hugely successful. I leave that to others who have better earned their broadcasting credentials.
	What I want to say, without any kind of hesitation, is that the BBC is an extraordinary institution and one that genuinely represents the best of public service values in Britain. It is one of those things about Britain which can claim to be genuinely outstanding. Because it is so successful so often, it can irritate—it certainly irritates me on occasion—but in part, that is the price that you pay for success.
	For a public organisation to be a world leader in an industry which globally is as fast-moving and competitive as any other in the world—probably more than almost any other in the world—and in which serious and contentious bets on the future had to be taken a decade or so earlier, is something of which we should all be proud. Because the BBC has been successful does not mean that it was ordained to be so successful; we should all be mindful of that.
	In general, when it comes to a financial settlement I tend to agree with the noble Lord, Lord Birt, who had so much to do with the success that I have described, who said that although he is a hawk on value for money, he believes that the BBC has to be very well funded. That is my certainly my view. I believe that in part because the growth of media fragmentation, channel proliferation and the almost exponential growth of new media outlets does not make the BBC less necessary, but more. One of the lessons of the growth of new web-based news communications is that the websites that bloggers use most often are sites that are both free and substantial enough to be the gateway to massive amounts of other information. There are very few such major gateway sites; the BBC is one of them; that position must be preserved.
	If the BBC retreated as an organisation in any way now, it would not just lose the battle of the present, but, far more disturbingly, the battle of the internet future also. Winning that future is important not just for broadcasting, but for Britain.
	There is a second reason for maintaining the strength of the BBC in a world of media proliferation. It is that all research into the patterns of behaviour in the use of new media shows that the internet is both a medium of individual communication and of community cohesion. In that context, the BBC can act as facilitator both of personal connection and of social bond. The BBC has never been more necessary.
	The issue on which I want to focus today is news. I can feel the whole House inwardly groaning: here is yet another new Labour apparatchik complaining about BBC news. I assure the House that I am not concerned today with political balance; I leave that to my private rants in front of my television set—they are definitely best left private.
	The issue for me is how the BBC develops appropriate news coverage for a new media age. For me, that issue first arose almost as a by-product of work I was doing for the election in 1997. Confirming the prejudice of all in this House, I personally conducted focus groups for each night of the election, including, amazingly, bank holidays. As part of that process, I used to show television coverage of each day's campaigning. I noticed something that I thought was interesting. It was that the public simply did not want to see the news interpreted for them; they wanted to be informed and then to make up their own minds. They saw the BBC correspondent or political editor not as an aid to understanding, but as a barrier to understanding.
	In contrast, a rival channel, which will remain nameless, had a different approach, allowing the politicians to speak for themselves and allowing the public to make up their own minds. That was far more popular and far more engaging. That struck me as a serious piece of learning. As each election progressed, that tendency has grown. People wanted information on which they could make up their own mind, not opinion that had already been made up for them by others.
	What I did not know then was that I was seeing in its nascent form the beginning of probably the biggest revolution in media attitudes in many generations. It is the shift from communication that is one-way to communication that is two-way and participatory. The point about the communications revolution is that people are increasingly no longer prepared to accept communication that comes from one top-down source, especially when it contains an opinion or a point of view. Instead, people want facts. They want to hear the facts and make up their own minds. They want bottom-up communication.
	When a senior political correspondent of the BBC asked me the other day: "Would it really be better to go back to the old way when the news participants gave interviews directly, and BBC correspondents just gave the facts?", he was absolutely right. Not just because it would make for better and more serious news, but because it is closer to the mood of modern times.
	What is perhaps most interesting about the BBC in the face of this news challenge is that it is taking two bets at once. It has mapped out two futures for BBC news. On the one hand, with its website, it plugged straight into the new communications zeitgeist. The website makes absolutely clear the distinction between news and comment. Every BBC correspondent writing a piece on current political events visibly strives for impartiality. All serious issues are examined seriously and explained in depth, and the arguments made for and against. Opinions are made; the BBC political editor has his blog, but we all know that it is his opinion and his opinion alone. Anyway, we can all respond to it, if we want to, on his blog. The BBC website is a model for the communication of news in modern times and must in no way be harmed. But the other bet the BBC has made is different. If the website is mostly about information, the main terrestrial news is about opinion. What was a nagging concern in 1997 became the basis of the whole BBC approach to television news. So-called two ways proliferated, political correspondents became more and more judgmental, and slowly but surely the crucial gap between information and opinion began to blur.
	Finally, the next and fatal step was taken. We moved from a situation in which not only the correspondents in the news bulletin articulated opinions but the whole news broadcast began to have an opinion, by which point we became very close to tabloid news. An example of this is the BBC six o'clock news on 22 May, which began, "A country awash with drugs; our special investigation into the crime ruining our communities. In our exclusive poll, drugs are a problem for three-quarters of people in their area. We live in a country in which countless families cower in their homes while dealers rule the streets, and where three out of four families we talked to experience a drugs problem on their front door".
	This information, which was contentious enough already, was presented in a sensationalist style that was a cross between Fox News and the Daily Mail. What was the information based on? I am embarrassed to say that it was based on an opinion poll, but one whose findings were at odds with the interpretation placed on them in the programme. Eighteen per cent of those surveyed said there was no drugs problem, 43 per cent said there was a small drugs problem, and about two-thirds said that drugs were no problem or only a small problem. There was no mention in the survey of a country awash with drugs, or of drugs taken outside the front door. This was all interpretation, opinion and sensation. This broadcast, I am afraid, was a classic example of tabloid TV.
	I know there are reasons for this. Time is short, ratings press and audiences are high, but this is the wrong response to the challenge of engaging the public at this time. People do not want the news to do their thinking and form their opinions for them; they want to do it themselves. The BBC will respond by saying that it retains the trust of the public; it does, but this may be changing. A survey commissioned by the BBC on 3 May says that 51 per cent nationally trust the Government, while 49 per cent trust the media. That is not a huge difference, but for the Government to be trusted more than the media in these times is a pretty remarkable feat.
	My point is clear; the BBC has taken two routes into the future at the same time. On its website, it has put information first and trusted the user to make up his or her mind. On its news, it has put opinion first as a way of creating interest and ratings and of maximizing accessibility. I am confident that I know which one is right; it is the modern way, the participatory way. It is to trust the viewers and allow them to make up their own minds, because that is the way of the future.
	I close by quoting Michael Grade, the current chairmen of the BBC and someone whom I greatly admire. He said:
	"We may have created a tension—on the one hand the expectation that editors should deliver the traditional serious news agenda, and on the other a perceived pressure on editors to win audiences—with the result that a certain confusion may have taken afoot about which is the right road to follow".
	This is a false dichotomy and a false tension. My view is simple; opinion blocks accessibility, but information assists it. We are no longer in a world of chasing ratings by creating impact and sensation; we are in a world of creating understanding by providing information and inviting response and feedback. In this new media age, there is no tension between seriousness and accessibility. If we allow people to have all the information they need, and we trust them, they will make up their own minds in their own time. That is the future, and thanks to the extraordinary work that it has done in recent years with the internet, the BBC is very well placed to face it.

Lord Inglewood: My Lords, I ought to declare an interest at the outset, as a number of other noble Lords have done. I am chairman of the CN Group, which has several local radio and local newspaper interests across the United Kingdom.
	I shall start as others have done by congratulating the noble Lord, Lord Fowler, and his committee on the work that it has done. At the same time, I echo his regret about the timing and nature of the debate. After all, the charter and agreement probably have a greater impact on the United Kingdom and its citizens than much—indeed, probably most—conventional legislation. I dare say that I probably recall the last time the charter and agreement were debated in this House better than most, if not all, other people. It was on 9 January 1996—a Tuesday, which I have to confess I did not remember. I really do not think that it is in anyone's best interests for the debate to have moved from a cold Tuesday in January to a hot Friday in June—all the more so because, in this charter and agreement, there is a much more radical reconstruction of the documents and what underlies them than there was 10 years ago.
	The legal basis of the corporation has always been controversial, as the way in which the Royal prerogative is used is somewhat unusual. I know the arguments in favour, and I know that they have been debated, but I question whether it is for the best to establish our principal public service broadcaster in the way in which it is. I certainly understand the frequently reiterated unwillingness of government to countenance perpetual parliamentary tinkering with the drafting of the charter—a kind of permanent revolution as it passes through the legislative process. I am sure the Minister will correct me, but it seems quite constitutionally regular for an Act of Parliament to amend what the prerogative creates. After all, inherited Peers' receipt of the Writ of Summons depended on the Royal prerogative, and that was brought to a summary end by an Act of Parliament. It therefore seems to be always possible for Parliament to amend either the charter or the agreement ex post facto if it were inclined to do so, so long as the Long Title of any Bill permitted it. Having said that, I accept that this is most unlikely in a highly Whipped Parliament. Nevertheless, it weakens the case for the use of the Royal prerogative in these circumstances. Furthermore, despite the detailed parliamentary scrutiny accorded the gestation and birth of the charter and agreement, I am really not convinced that the unusual structure of the corporation and the unusual process that leads to its coming into effect are desirable in parliamentary terms.
	The last time the matter was debated in this House, the Minister said,
	"if it is clear that your Lordships' House finds either document unacceptable the Government will consider whether changes are necessary before proceeding".—[Official Report, 9/1/96; col. 13.]
	On that occasion, there was a lot of criticism of the charter and agreement, probably from most speakers, but the Minister concluded that they probably did not represent the feeling of the House as a whole. Even if they had, I do not think the Government of the day felt that it was appropriate in all the circumstances to make any changes before proceeding. I do not know whether that provides any guidance of the Government's behaviour on this occasion, but all that happened, so far as I recall from this perspective, was that a substantial number of the critics subsequently died. Indeed, the only real justification for the structure seems to be almost metaphysical, as it helps to define and identify the corporation as a one-off, sui generis, publicly funded, non-state broadcaster, which makes it a highly unusual phenomenon, but one which I have no difficulty supporting in principle.
	As I have said, one of the most interesting aspects of the charter and agreement is how they are different from the previous ones. This is most obvious in the structure of the corporation itself which, as we all know, has been revised following the Hutton inquiry. At the time, that led to a fundamental reorganisation of the systems of the corporation's governance, which had been set in the old structure. Of course, the new structure has been put in place to bed those down more happily.
	The two-tier structure of what I like to call the "new" BBC must owe quite a bit to the two-tiered management and supervisory board structures of continental company law, with a supervisory board doubling up, at least to some extent, as its own regulator. Whether this will provide the solution to the traditional criticism levelled at the governors that they are judge and jury in their own case remains to be seen, but at least it is now to be given a chance, although I must say that I am not at all certain it will.
	The structure of the new arrangements can be said to be a success for the existing chairman and his team, who have guided the process of inevitable change in the direction they wanted, and they certainly deserve credit for achieving that. But it leaves a result that is essentially conservative with a small "c". Here I echo the noble Lord, Lord Bragg, in predicting that in 10 years' time the broadcasting world will be almost unrecognisable from what it was 10 years ago and possibly may be unrecognisable from what it is today. For my part, I think it very significant that the corporation's purposes have been redefined expansively—no secret has been made about that—but it leads us in the direction of the current of those changes which are happening to all media businesses around us even as we speak. The role that a broadcaster deploying digital technology plays in contemporary society is enlarging and changing rapidly. The kinds of purposes which are added are no doubt excellent in themselves, but they are moving the corporation away from its old personality as originally a monopoly and then an oligopoly broadcaster towards a public deliverer of the public media good in a world defined by consumer and supplier choice. This will inevitably mean a change in character just as, for example, the establishment of the National Health Service in 1948 changed much about the provision of medical care in this country. That, in turn, is now being changed by the process of privatisation within the National Health Service itself, as well as by private provision in parallel with it.
	One of the interesting aspects of convergence, and I speak as someone who is involved with them, is the way in which newspapers are being affected. Having for some time seen the dissemination of news divided pretty clearly between analogue broadcasting systems and printed paper with a clear line of demarcation between them, it is now apparent that this distinction is nothing like so defined. There is no doubt that local newspaper products now include websites, webcasting and computer delivery, while at the same time the BBC proposes local city-type television as well as local radio and news websites. For the first time there is a significant and widespread overlap between them. What should the correct public policy stance be towards this? On the one hand, no business in a free marketplace has a right to exist under any circumstances. On the other, plurality of news and media material is very important, and where there is plurality which inevitably involves some competition, that competition needs to be fair. The Newspaper Society has flagged up its concerns about the possibility of damaging unfair competition in this area, and clearly the trading governance of the trust will play an important role. It would be interesting to know the Government's attitude in this regard. Do they consider that the principles of general competition apply or, because we are talking about the media, are there additional special criteria which ought to come into play? If so, what might they be? The answers to these questions have much wider consequences than merely the immediate fortunes of local newspapers because they will probably define the nature of the collection and dissemination of news and related material for years to come.
	Equally, local radio is affected by BBC activities in a somewhat similar way because in some cases private sector commercial services are finding that their formats face BBC competition for audiences which in many cases is moving broadcast outputs into the middle-of-the-road ground where many commercial broadcasting formats have tethered them, and from which the BBC had to some extent moved away in the 1990s when many of the licences were granted. Here again is a series of rather obvious issues for competition policy and plurality which require careful thought, and again I would be interested to know the Government's view.
	On top of this, since the trust quite rightly is going to be independent of government, how will the other broadcasters and businesses in the marketplace where the BBC is involved get to know the rules of engagement under which the BBC is operating? Other broadcasters know the rules under which they and their non-BBC competitors are working because they are set by Ofcom. What about enforcement across the divide between the two regulators? In a marketplace where revenue is determined by audience, what one's rival is offering is a crucial consideration, and competition considerations can be central to that.
	Like other noble Lords, I very much welcome the great investment made by the BBC in multimedia activities. As my noble friend Lord Fowler said, much of that is due, to his credit, to the noble Lord, Lord Birt. The reason for this is simple: no longer is content ever again to be distributed solely across the airwaves. That being so, the ways in which content is distributed are going to be various, and the format in which it will be disseminated will vary to a greater or lesser extent from medium to medium. If the BBC does not stay with the pace, and that pace is being set globally, not domestically, that will be extremely bad for the United Kingdom as a whole. At the same time, if too much of the UK domestic media marketplace is taken over by the BBC, that too will be damaging to the national interest.
	The key to this is to recognise the central importance of pluralism and diversity in this debate. Internationally, we need a broadcaster which can talk to the world—to British people abroad, the English-speaking world and everyone else. Whether that is done through the BBC World Service, 24-hour television services or whatever else does not seem to matter. At the same time, at home we want our publicly funded public sector broadcaster to help provide a fertile context where plurality and diversity can flourish, be that from the private or the not-for-profit sectors operating under conditions of fair competition.
	I do not suppose any two people would organise the BBC in the same way, and I do not think I would have done it in the way being suggested in the draft charter and agreement, but the new ship will no doubt be launched as planned. In the mean time, the crucial judgment about this is not to think only about how well the BBC itself works and performs, rather it also involves how the BBC's activities affect the rest of the media marketplace. It is not that I do not want the BBC to be successful; like other speakers in the debate I do want that. But while it is successful, it must not destroy the others as it evolves a new modus operandi for the second decade of the 21st century.

Lord Young of Norwood Green: My Lords, I thank my noble friend Lord Davies and the noble Lord, Lord Fowler, for giving us the opportunity to debate the BBC's new charter. As many have said, it is a crucial moment in the development of broadcasting. No longer are we seeing the shared experience; today you can create your own programme content through concepts such as podcasting. They can only increase in an era where broadcasting is changing in many different ways, with high-definition television, digital switchover and so on. It is therefore appropriate to look at the past before examining the future. Like the noble Lord, Lord Ryder, I ought to declare an interest in that I too am an ex-governor of the BBC, someone who has been in the belly of the beast, so to speak. I am also chair of the One World Broadcasting Trust. That tends to colour your views. As a governor, you are given the full five-volume history of the birth of broadcasting by Asa Briggs. I confess that I have not read it from cover to cover—I have not yet met a governor who has—but I dip into it from time to time. One of the chapters describes broadcasting as a public service and states:
	"The Postmaster-General's eloquent tribute would have been more convincing had he not been attempting for some time to reduce the licence fee on receiving sets. Some disgruntled Members of Parliament were pressing him to do this, while others were asking for differential licence fees for the owners of crystal sets and valve receivers".
	That is a chastening thought for those of us who can remember the crystal set and trying to receive anything at all on it, although occasionally you did get the dubious delights of Radio Luxembourg.
	I then looked at another chapter, From Company to Corporation, which stated:
	"The Postmaster General at once specified a continued restriction on the freedom of the BBC. He informed the House of Commons on 15th November 1926 that he had instructed the Corporation that when it began operations it was not to broadcast its own opinions on matters of public policy, nor was it to broadcast on matters of political, industrial or religious controversy".
	That would have made for a short "Today" programme, that is for sure. Thus Reith's plea for controversial broadcasting, cogently restated to the Post Office in July 1926, had been rejected, and it was not until 1928 that the ban on controversial broadcasting was withdrawn experimentally.
	I found it interesting that when they were concluding the terms of the first draft of the charter, one of the points of disagreement was the no advertising clause. Surprisingly, Reith was arguing for advertising. He said:
	"There should be some liberty with regard to advertising as a supplementary source of revenue in case of need".
	That is an interesting fact that I had not observed before.
	Another debt that we owe Lord Reith—who, after all, probably did more than anyone else to create the concept that we call the BBC—was for probably the shortest and most effective mission statement on record: to "inform, educate and entertain".
	If there is a shorter one that is more relevant, I have not yet come across it. It is as relevant today as it ever has been.
	I listened carefully to what the noble Lord, Lord Fowler, said—unfortunately he is not in his place at the moment—because he is always worth listening to. It was nice to hear him refer to the BBC as almost an oasis of balanced reporting and pay tribute to the World Service. I echo that. However, I share some of my noble friend Lord Gould's concern about news. You sometimes wonder—this does not relate only to the BBC but across all broadcasters—whether they are sometimes concerned, not with reporting the news but with creating it. It is a delicate balance which not even the BBC, I would submit, always gets right, although it does have a justifiably good reputation. The World Service is not the only jewel in the BBC's crown; there are many other such aspects, for example the BBC's website and, of course, Radio 4.
	There has been a great deal of criticism about how we achieve a digital switchover. I have some sympathy with those who express concern about the costs of this being a part of the licence fee, given the sensitivity of the licence fee and that, we have to acknowledge, it is a regressive tax. Nevertheless, whatever its critics say, no one has yet come up with a better instrument for funding the BBC. So, perhaps, rather like Churchill's definition of a fair democracy, it is the least worst form of fundraising.
	There has been some criticism about regeneration in the regions and the move to Manchester. I do not share that criticism. I am one of those people who felt that if there was a criticism of the BBC's funding and so on it is because it is too London-centric. So I share the view of the right reverend Prelate the Bishop of Manchester on that.
	As to quality—these are subjective views—I am one of those sad souls who, every week, buys his copy of the Radio Times, which contains a reasonable mix of what some describe as intellectual, cultural and entertainment material. It is still trying to achieve the Reithian objective. I cannot resist—I do not know how large the volume is—referring to the wit and wisdom of Greg Dyke. He amused me on one occasion, when the BBC was being criticised for the number of repeats, when he said, immortally, that it is only a repeat if you have seen it before. It is hard to argue with that assessment.
	But there is some value in repeats. We are in a transition period, where analogue is being transmitted at the same time as digital and, if you have bothered to get yourself a Freeview box, you can see some of the excellent programmes that have been broadcast on BBC Four emerge on BBC Two. Personally, I think that is a good use of repeats.
	The noble Lord, Lord King, who is not in his place, said that he doubted whether anyone supported the current proposals on governance. I must be one of the small band of people who do. That is not because I think they are perfect—I can understand of my noble friend Lord Ryder's analysis that the separation of powers might be imperfect. But as a BBC governor, I argued that the previous arrangements were far too incestuous, that the relationship between the two was much too close and that there was not enough independence. I think this is a significant improvement.
	Is it perfect? No, I do not think that we can arrive at a perfect arrangement. My noble friend Lord Inglewood said that no two people would agree. I tend to agree with him. So we will have to see how it pans out. But it builds on the reforms that were begun by the governors in what might be described as an in extremis situation and it extends and codifies those changes.
	I personally welcome the two reforms. The first reform is that the trust will determine whether the BBC should undertake new services; it will no longer be a task for Government or the DCMS. That is important. The second, complementary reform is that the trust shall have a duty to have regard to the competitive impact of the BBC's activity, and in deciding whether to accept management proposals for a new service it will look at the market impact—it can rely on a survey from Ofcom—as well as the public value of the service. That, to me, is a step forward.
	Is the charter absolutely right? It is probably as good as any declaration of purpose for the BBC as a public service broadcasting corporation. Six purposes are set out—I do not have the time or think it is necessary to go into all of them—but, in terms of sustaining citizenship and civil society, the breadth and depth of the BBC news and current affairs programming stands out.
	As to whether the BBC is fulfilling its remit, perhaps I may give one example. The BBC has, for a long time, broadcast "Question Time". If you watch it, you might find it, as I do on occasions, irritating sometimes because it only scratches the surface of an issue, or sometimes because of the clearly partial views of those who participate, or sometimes because the audience is not to your taste. Nevertheless, it is a popular way of ensuring that the key issues of our time are being debated.
	Further, for the past few years, the BBC, with partners, has been running "Schools Question Time", where schools are encouraged to run their own version, submit their own ideas for issues and panellists, with the winners having the chance to produce their own edition and having it broadcast on BBC One. This seems an excellent way of encouraging citizenship and participation in the political warp and weft of our society.
	Secondly, as regards stimulating creativity and cultural excellence, the different views are interesting. I can remember being impelled to put pen to paper to disagree with an art critic who was castigating the BBC for delivering a programme called "Rolf on Art", which was a very popular way of looking at art. It had an audience of between 2 and 3 million. How many other programmes looking at art in detail would have achieved that audience figure? So there is not only one way of stimulating creativity and cultural excellence, and we should applaud diversity in this area.
	There has been criticism from some in the commercial radio sector that BBC Radio—particularly Radios 1 and 2—are merely replicating the music played on commercial stations. That is interesting because the accusation ignores the facts. Indeed, Ralph Bernard, the chief executive of GCap, said:
	"It is a myth that the BBC is more dominant than commercial radio. The commercial sector has a larger share of the audience that matters, 15–44 year-olds".
	Over half of all daytime music on Radio 1 was new during the last survey period in October 2005, with an average level of new music on the commercial stations surveyed of just 30 per cent. Of Radio 1's music, 57 per cent was by UK artists. Noble Lords possibly do not enjoy much of it, but I know that my teenage children do. No other station played as great a range of new songs by UK artists. Compared to other stations, Radio 2 tends to play a greater number of songs, repeating them far less often. I could go on, but I do not think that it is appropriate.
	I shall comment briefly on the licence fee, on which there has understandably been a fair amount of comment. Those who say that the Government should scrutinise the bid by the BBC are right. There is a balance to be struck between delivering the expectations of licence fee payers, while doing so at the lowest possible cost. No doubt negotiations will be pretty tough, as they should. I note my noble friend Lord Ryder's assessment of what it should be. That is the important thing. I used to feel in pay negotiations that you did not always get exactly what you claimed, although you would have liked to. It is worth noting that over the next 10 years the BBC has undertaken, as part of its licence fee bid, to fund 70 per cent of its new investment from self help, being on course to secure £355 million savings.
	I shall end by picking up my noble friend Lord Bragg's point about looking at public service broadcasting as a whole. That is right. The strength of British broadcasting has been its diversity. It is not just the BBC, although it probably is the jewel in the crown that we seek to preserve. My thanks once again to those noble Lords for ensuring this debate.

Baroness Gibson of Market Rasen: My Lords, it gives me great pleasure to take part in this debate today. Unlike many other speakers, I am no expert on the BBC, broadcasting or the media, although I am more knowledgeable now than I was before I joined the Select Committee.
	I have always been, and remain, a keen supporter and admirer of the BBC. My enthusiasm for the Beeb was why I was so pleased to be a member of the Select Committee on the BBC's charter review, an experience which I thoroughly enjoyed. I was extremely lucky to serve under the chairmanship of the noble Lord, Lord Fowler, whose wisdom and diligence guided the committee through many sticky areas. None was more sticky than when we discussed the BBC and religious broadcasting, when the right reverend Prelate the Bishop of Manchester on the one hand, and my noble friends Lord Peston and Lord Maxton on the other, held what could be described as "differing views". That we came to a consensus on these and other issues owes a lot to the guidance given by our chair, and I thank him.
	The revised draft charter and draft framework agreement before us today are important documents. The BBC is a vital part of the life of the United Kingdom, and its aims, how it is run and its accountability play a key role in that life. I shall concentrate on three issues today: the BBC Trust and executive board, the licence fee and the licence fee payers.
	The Select Committee took the proposals on the trust and the board very seriously. They were the nub of so many other issues. We concluded, after lengthy debate, that there were many anomalies in the proposals for two separate entities. The differences between their roles were not immediately clear to us. To enable effective separation between governance and regulation, we opted instead for a unitary BBC board, and a strengthened Ofcom content board with duties to regulate the content of BBC television and radio. However, these proposals were firmly rejected by the Government. Indeed, when we discussed them with the Secretary of State for Culture, Media and Sport, it appeared that there had never been any chance of altering the trust proposals; they were written in stone.
	At that point, and this being my first Select Committee, I could not help wondering why this had not been made clear to the committee from the start, thus saving us time and effort. However, members more worldly wise than I told me that this often happens irrespective of the Government in power, which only goes to show that all governing parties have their little weaknesses. However, in the draft charter before us, it appears that some of our concerns have been listened to, and some of my fears about the two bodies have been allayed.
	Now that the proposals have meat on their bones, we know roughly how the trust and executive board will work and who the members of each body will be, and their role and functions are spelt out in more detail, as is their relationship with each other. What was described in our discussion with the Secretary of State as a blank sheet of paper has now been written upon.
	For me, however, one important question remains. It is slightly different from the one raised by the noble Lord, Lord King of Bridgwater, about trustees. I still do not understand exactly how the trustee board members will be chosen. In our final discussions with the Secretary of State, she said of future trustees:
	"I think that what is important is that those who are appointed to the Trust reflect the new nature of the BBC Trust, the fact that it is different from the Board of Governors . . . and, therefore, in seeking or inviting applications to my Department . . . we will have to take steps to reach out beyond the population of excellent people who would in the normal course of events come forward. This is a process which takes time in my experience. It may take some time before we have a Trust which is fully reflective in the way we hope".
	Obviously, therefore, the trust members are to be carefully chosen, and will be of an exceptionally high calibre. I wonder, therefore, whether my noble friend the Minister can tell the House what process is to be employed to seek people who would not normally come forward. What would be the criteria for applying to serve on the trust?
	The licence fee, again, created a great deal of debate, especially with those who gave evidence from rival organisations. We supported the BBC funding through a licence fee until 2017, and the proposals from the BBC itself to review alternative funding once the effects of digital switchover are clearer. We must remember, when discussing the licence fee, that the BBC's aims are significantly greater than those of its rivals, both at home and abroad, so the need for a sensible licence fee is obvious.
	However, it is also obvious that the Beeb must not price itself out of the market. The committee was very conscious of this and I hope the BBC is as well. In a recent speech, Mark Thompson, the BBC director-general, tackled some of the misunderstandings and myths surrounding the licence fee and explained its importance to the BBC. He pointed out that the Government set clear objectives for the BBC in 2000, and that eminent independent commentators had accepted that the BBC had been extremely successful in meeting them. He denied categorically the accusations from some quarters that the BBC's revenue has grown out of control, and said that he had never seen a shred of evidence to support this supposition. He also said that the licence fee is seen by the BBC as,
	"a contract between the BBC and, ultimately, the British public for the delivery of content that furthers various public purposes".
	As such, it is vital to the BBC and its future.
	I welcome these comments, which show that the BBC recognises the importance of discussion on the licence free. However, the noble Lord, Lord Fowler, raised the worries and observations of the committee about the licence fee. The points he raised, which I shall not repeat, should be considered in depth by the Government. I also hope that full, careful thought will be given to the establishment of a permanent Select Committee, which would be enormously helpful now and in future.
	At this stage, I shall mention a small but important matter that the Select Committee believes could be acted upon immediately. In the first report, point 304 covers the decriminalisation of non-payment of the licence fee. It is nonsense for non-payment to remain a criminal offence. I ask the Government to decriminalise that offence and bring it into line with other civil offences. They should use fixed penalty notices and civil court orders instead.
	I shall turn briefly to the inclusion of new members of the public in decision-taking at the BBC. Audience councils for the four nations are a new and important concept that I welcome wholeheartedly. Licence fee payers from diverse and geographically different parts of the kingdom are to have a voice at the very heart of the BBC. The councils' remits are good. They are designed to provide a wide number of opinions from local communities and to oversee how public purposes should be pursued and public value tests applied by virtue of the framework agreement. I look forward to seeing the protocol that will establish the setting up, running and recruiting of those councils.
	I also welcome the clear proposals relating to communications with staff at the BBC. No organisation can be fully effective unless it has its staff on its side. I hope the BBC will always remember that message. I believe that we should be, and are, justifiably proud of the BBC. So many people in the world envy us for it, and it is such a very British institution. Like other noble Lords, I pay a special tribute to the BBC World Service, which currently serves 163 million radio listeners weekly. That is a record audience, and smashes all previous listening records. It is an outstanding achievement. I send many congratulations to the director, Nigel Chapman, and his team.
	Serving on the Select Committee was a learning curve for me, and I undoubtedly learnt a lot during that time about the BBC and broadcasting and the media generally. As other noble Lords have said, the television and radio world is changing swiftly, especially in relation to digital switchover, and its future is exciting.
	Finally, I thank my colleagues on the committee from all sides of the House for the friendship we shared and the information we exchanged.

Baroness Deech: My Lords, I start by declaring my interests: I am a BBC governor. Your Lordships will not see or hear my like again. I am the last of a species that has served the country and the BBC well over 80 years, and overseen its growth into the respected and influential organisation that it is now, with 250 million worldwide listeners and news that reaches 80 per cent of the population every week. I was appointed in response to an advertisement in the newspapers, according to Nolan principles. Like my fellow governors, once led by the noble Lord, Lord Ryder, I am beholden to no one, except the licence fee payers. I have no other interests to promote. The governors have been remarkably good value for money, with salaries way below those paid by Ofcom.
	Even in my few years as a governor, we have seen changes introduced that would not have been contemplated or imagined 10 years ago, when the charter was last renewed, or even five years ago— 24-hour news, online services, the website, in its position of prominence, and widespread public interaction with the BBC through all sorts of new technologies. Those changes have enabled every citizen to express himself or herself if they want to, make common cause with others and communicate with the BBC. In most recent years, with licence fee money, the BBC has launched a digital curriculum for the education of children—or grandchildren in your Lordships' case—and it has started digital switchover. It has become a leader in Europe in its field, with the assistance of Freeview.
	With that record, why is change necessary? It is necessary not because of problems with the governors, but because the broadcasting market has changed and our national views on appropriate corporate governance have developed to such a point that they must be taken into account in a new charter.
	The draft charter, which I am happy to support, is the product of the most sustained consultation and debate process I have ever known. It was starting when I became a governor four years ago. The Government's first consultation paper was in 2003. Arguably, too much time has been spent on examining and digging up programmes and services that have barely bedded in. There was never such a deep consultation before—DCMS seminars, White and Green Papers, public and private debates. That is more, dare I say, than a parliamentary timetable might have allowed for were the BBC to be based on an Act of Parliament, instead of, as it should be, a Royal Charter. It is not at the mercy of political cross-currents or priorities. The result is a charter with four times as many clauses as last time and changes fit for the 21st century. The charter is renewed and the licence fee is to be retained. The public, as I will show, rate the independence of the BBC very highly. That independence rests on a constitutional structure that has stood for decades—tinker with it at your peril.
	In all the discussions and examinations that have preceded and will follow this debate, your Lordships must not risk losing sight of the two essences of the BBC that need defending—its independence and its quality. They will be safeguarded by the trust, but they are not at the forefront of the concerns of its competitors. Only the trust can safeguard independence and listen to the licence fee payers, whose interests must dominate. The trust needs the strength and the mandate to do that job. The trust will follow the governors in setting the strategic direction of the BBC and overseeing the work of the executive board. The trust will be the final arbiter of complaints. It will seek the views of the licence fee payer and will set objective measures, as has been mentioned earlier in the debate. It will have regard to the BBC's impact on the market, bearing in mind that up to half the BBC's network production will be available for independents.
	Your Lordships might ask whether too much sensitivity is being shown towards the BBC's market impact on its commercial competition, whose concern is its own commercial self-interest and not innovation, creativity or independence. The BBC has agreed to rein itself in for the sake of the preservation of competition and a broader market in a way that would never be applied to competition in new health or education measures in the NHS or the education system. The BBC's overriding duty must be to its licence fee payers and it has to give them the best return for their money. Indeed, the website has already been trimmed back solely in response to market fears, yet there is no guarantee in return that commercial broadcasters would thrive and grow more if the BBC were to be diminished—on the contrary. The charter will ensure that there is no unchecked expansionism.
	The licence fee concept gives stability and a measure of freedom from political interference and manipulation. In return, the BBC has an obligation directly to its public. The trust will consult and listen to the public, as did the governors. The licence fee does not only bring TV; let us recall also radio, the website and the training of media people throughout the industry. The BBC sets standards throughout the whole industry, educates the young and learners of all ages, talks to minorities in their own languages, mirrors local communities back to themselves, preserves the languages of the nations and is a guarantee of news and information regardless of the ups and downs of the rest of the audio-visual industry. To follow my own interest, it is above all a supporter of live music. The classical music scene of this country, with the Proms and the orchestras and choirs, rests to a large extent on the BBC and the licence fee payers' resources—and well used they are.
	Our informed democracy has come to rely on this provision and communication. Even if the fee rose to £150 or £180 a year, it is still under £4 a week, which is less than buying a daily newspaper, no more than the cost of a few tickets for the more popular entertainment and less than subscriptions to commercial rivals. The licence fee forms 23 per cent of the total revenue of the entire industry, a figure that is down from 46 per cent in 10 years.
	It has been shown that there is public support for the level of the fee as bid for by the BBC. Professor Patrick Barwise's independent report on public opinion on the licence fee bid shows that most licence fee payers would, if they had to, pay substantially more than the current £10 a month for BBC services. In fact, when new services were brought to mind, up to 70 per cent to 75 per cent of them were happy to pay a higher fee. They are evenly divided over paying extra fees to help the vulnerable to achieve digital switchover, which is a government proposal accepted by the BBC in the interests of ensuring universality of digital reception.
	The BBC is highly trusted and valued by the public and realises that the adaptation to changes in markets and technologies requires a slightly higher licence fee. According to Barwise, the public want the BBC to continue as one of the pillars of broadcasting and would prefer it to be strong and innovative, even if it takes a few more pounds a year. Like a husband or wife in a long marriage, there is always something to grumble about in the daily offerings, but it would be intolerable to weaken that companion to our daily lives. The support is not begrudged, for the strength of the union is recognised.
	I see no room for further scrutiny by the NAO. The current arrangements came into play only in 2003 and appear to work well. There are special issues of creativity and risk-taking that cannot be amenable to ordinary audit and need to be shared by the BBC and the NAO. The BBC's expenditure is under other agents of scrutiny. The BBC's commercial arm is striving for efficiencies and self-help. There are plans to save some £350 million a year and to cut many thousands of staff. Above all, there is no lack of accountability—to Parliament, as witnessed by this debate, to Select Committees from time to time, to Ofcom in certain areas, by service licences and by approvals for new services. Indeed, never was a body so accountable, given the need to preserve its independence.
	Given the BBC's record of leading the way in revolutions—its website, its digital progress and the way in which it provides the public with a technology that it now seems our lives cannot do without, noble Lords, to quote Barwise,
	"should not be asking the BBC for a Soviet-style plan which says exactly what it will be doing, and how it will allocate its resources, in five or seven",
	or 10 years' time. Its past record is its defence, and the new charter achieves the right blend of obligation and flexibility. We have seen the problems that can be caused in other areas of public life by micro-management and too much target-setting. Your Lordships should have confidence in the future of an organisation that it has watched over for 80 years. The BBC should speak to and listen to the public who fund it, with no unnecessary regulatory or political barriers between them to distort the message.

Lord Gordon of Strathblane: My Lords, the disagreements between the Select Committee and the Government are very succinctly set out in the letter of the noble Lord, Lord Fowler, to the Secretary of State for Culture, Media and Sport. It may therefore seem strange that I feel able to congratulate both the Government and the Select Committee on the work that they have done. I feel that both have done their job well.
	My noble friend Lord Davies, in opening the debate, said that this had been the most open and transparent review ever, and I think that that is true. I think that the Government have not moved in the direction of agreeing with me as they should have done—but that is entirely up to the Government. They have moved some way on a lot of issues. It is also a hugely difficult process to manage the renewal of the BBC charter and licence fee. In some ways, if we could decouple one from the other, it might help, because we are left with the most important question of all—the quantum of the licence fee—still hanging in the air. I would recommend that a committee from time to time be set up. My noble friend Lord Lipsey and I served on the previous one, under Gavyn Davies, looking at the licence fee. That helps to distance the matter a bit from the Government and it gives the Government an outside viewpoint on what might be appropriate.
	I should also like to congratulate the committee under the noble Lord, Lord Fowler, on its work. It has been a very thorough series of reports. This is now our third debate, and each of them has been highly illuminating. The clamour of support for a permanent Select Committee on communications and the media evidenced in this House on Wednesday is not only tribute to the importance of the subject—which is, I think, vital in a modern democracy—but a recognition of how well the committee did that job.
	I open with one regret. Exactly as happened 10 years ago—when, slightly ahead of time, on 9 January, this House was having exactly this debate, with exactly the same concerns about governance and accountability, and about the renewal of the charter—a speaker observed how convenient it was that the next week we would have the Second Reading of a broadcasting Bill where we would be able to look at the rest of broadcasting. I have never understood the logic of looking at all of broadcasting except the BBC, which is the biggest part of it, and then at the BBC. That simply cannot make sense. You cannot look at the ecology of broadcasting and divorce from that survey the activities of its major player.
	I am on record throughout all the debates on the Ofcom Bill as wanting the BBC under Ofcom. I think that that would have safeguarded the BBC. The Government have set their face against that. They have moved in some regards, but I think that to some extent we may well have the worst of both worlds. We will have a board of trustees who are more divorced from the day-to-day running than the governors were and therefore cannot influence from the inside, and yet not sufficiently divorced to satisfy those who feel that the board should be wholly independent. That could well create problems. For example, I foresee problems, although I hope that they will not occur, between the market impact assessment that will be conducted by Ofcom and the public value test that will be conducted by the trustees. Ultimately, however, the trustees will be able to overrule Ofcom. That is a recipe for tension which need not exist.
	It is very important to recognise, as the noble Lord, Lord Bragg, and others have, that the BBC is our most important public service broadcaster. But broadcasting in this country would be immeasurably the poorer if it were the only one. The commercial sector has exactly the same public sector obligations as the BBC. It discharges them without the subvention of the licence fee; it discharges them by raising money through advertising revenue. Once we have a private sector that no longer values the licence—because, frankly, you can replicate access to the viewers through other means—the incentive to retain that licence and to perform public service at no cost to the public disappears. I share the view of the noble Lord, Lord Bragg, that the Government should bring forward their review of public service broadcasting in the round so that we do not wait until 2011, which may well be too late.
	As regards the points on which the noble Lord, Lord Fowler, disagreed with the Government, I should indicate which side I am on. I am afraid that I agree with the Government regarding the Royal Charter. I recognise the point about Acts of Parliament, and it all sounds very nice and democratic, but the grave danger is that we would end up with amendments from pressure groups changing the nature of the charter. The noble Baroness, Lady Deech, pointed out that the current charter has four times as many clauses as the previous one. No one could quarrel with the new public service obligations, but why should we not add promotion of a healthy Britain or promotion of a safe Britain? The problem is that, the more clauses you add, the less severe the scrutiny will be of any of them. We shall end up with corporate governance, ticking boxes; there will be no real scrutiny. We need to be careful about that.
	I will make some broad points on the quantum of the licence fee. We need to be careful here. I fully appreciate that the BBC does its job extraordinarily well. It would do other jobs extraordinarily well, but is it in the public interest that we have a degree of mission creep, as it were, where the BBC gradually moves more and more into other fields, thus making it impossible for a commercial operator with public service obligations to operate in those fields? I suggest that it is not.
	Most of the BBC's morning programmes are concerned with home improvement. Should the BBC publish magazines on home improvement? If it did, would it not have a considerable advantage over a commercial provider of such a magazine, simply because of its ability to promote it on air? The BBC does excellent holiday programmes, but should it produce a holiday magazine? Should it even run BBC holidays? Where do you stop? The BBC would do all those things extraordinarily well, but there has to be a limit. We have to be careful about whether we are funding a public service broadcaster or a public service provider of things well beyond broadcasting. That will be a constant problem.
	My next point relates to the market impact assessment of the size of the BBC settlement in relation to other broadcasters. I hope that it is not intended to safeguard anyone from competition. The BBC does extremely good programmes, but it is important that we do not have a settlement that fuels inflation in broadcasting rather than simply enabling the BBC to meet it. The BBC is the biggest payer in broadcasting because it has the most money. If you exacerbate that situation, you will further weaken the rest of the sector.
	The popularity of some BBC radio programmes is fully justified, but I hope that no one would suggest that the BBC should be under less stringent regulation when changing a service than the commercial sector is. They both should have identical obligations to say what they are going to do and then stick to that. One should not be weaker than the other.
	On the process for determining the licence fee, the case for NAO involvement in scrutinising the BBC's bid is overwhelming. It would help the BBC. The BBC did not do its own case any good when the figure for Manchester suddenly switched from £600 million to £400 million. It gave some credibility to the crack made by Charles Allan of ITV that these were calculations done on the back of a fag packet. I am sure that they were not, but it did not help the BBC's case. As the noble Lord, Lord King, observed, the BBC had seriously underestimated the benefit to it of the increasing number of households in this country brought about for very distressing reasons, such as single parent families and divorces. There are more households than ever before and the benefit to the BBC in increased licence income has not been fully brought out.
	I recommend that all noble Lords read the evidence given to the Select Committee by the noble Lord, Lord Birt. I am concerned that he thought that it would be impossible for an outsider to decide whether the BBC was giving value for money. In a way, that is quite worrying, and his criticisms of the previous regimes at the BBC as being profligate with licence fee payers' resources are quite worrying. It is a pity that that was not recognised more at the time.
	I have very quick points on things that should be included in taxation rather than in the licence fee. Digital transmission is properly part of the licence fee, because one of the key obligations of public service broadcasting is universality of provision. There was a time when the BBC owned its own transmitters, before it sold them to an American company, Crown Castle, and the ITV transmitters used to be owned by the Independent Broadcasting Authority to make sure that they were held in the public interest. By contrast, I agree with the Select Committee that, as it were, the social costs of giving free licences to people, or helping people with the licence fee, is frankly a perfectly laudable social objective; however, it should be met out of general taxation and not out of the licence fee.
	Most important of all, I am concerned about moves to charge for spectrum and the unfortunate unwillingness of the Secretary of State to rule that out when asked about it directly by the noble Lord, Lord Fowler, in the recent hearing. Spectrum will be auctioned off by the Government; no Treasury will resist the opportunity to make a bit of money. All public service broadcasters should be exempt—not just the BBC, but all who profess public service and adhere to public service obligations—from paying that. That is the only carrot that you can offer a public service broadcaster nowadays to retain public service obligations. If you do not, you will gradually have more and more of a free-for-all, with fragmentation replacing regulated competition and a resultant loss of quality. We must also consider the impact of high definition television, which will require more spectrum. Will that be held up because it is using more spectrum and therefore, arguably, costing more money?
	I have two closing points. Fragmentation of the industry has caused a major problem in the commercial radio sector. A few years ago, the commercial radio sector had a 51 per cent listener share against the BBC's 49 per cent, and the BBC fully expected its share to go down. In fact, the BBC share has now gone up to 56 per cent and commercial radio is at 44 per cent, although it is much higher in the younger age groups. The reason for that is not only very good programmes from the BBC—which they are—but the increase in the commercial sector of about 100 new stations, very few of which are making any money whatever. They are fragmenting the audience. It is incumbent on the regulator to ensure that we do not over-saturate the market with more services than can reasonably exist. We must ensure that we have enough human, technical and financial resources to support the services that are introduced.
	My final point is linked to the technology argument. The real danger that we now face, and we will certainly face it when we next have this debate in perhaps 10 years' time, is that technology is taking over. I am afraid that a lot of the public service arguments have disappeared. The pupils are now deciding the curriculum. The days when someone at the centre could give the listener or the viewer a tolerable leavening of what they should have are gone. The viewer or listener demands the news bulletin that he or she wants, when he wants it, for as long as he wants it. If his only interest in life is Wayne Rooney's metatarsal, "Big Brother", and one other thing, fine: that is the news bulletin that he will get. I am afraid that that is happening increasingly.
	I recommend to the Select Committee in its new form the following subjects for early discussion. Do we need to regulate the internet in the light of what is happening? How do we recognise the effect of internet migration on existing broadcasting and newspapers that depend on advertising? Those are only two subjects among many that would justify the continuance of a Select Committee on media and communications, which I hope this House will set up shortly.

Lord Lipsey: My Lords, on a hot, sunny afternoon and when one is speaker number 14 out of 14, one might be forgiven for concentrating on those areas on which one disagrees with the many excellent speeches that have been made this afternoon, rather than on those with which one agrees—particularly as those speakers will have absolutely no right of reply.
	I start with the process, and I do so, as the noble Lord, Lord Gordon, pointed out, as a member of the Davies committee, which undertook part of this job last time round on the licence fee. This time, the process has been quite good—certainly better than last time. We have had a Green Paper; a White Paper; very importantly, the Burns seminars and the excellent work that went into them; PKF on the efficiency of the BBC—a fascinating and under-read report; and reports from the Commons Select Committee; and reports from the excellent committee chaired by the noble Lord, Lord Fowler. We have also had a good deal of public consultation.
	On the last point, I was reminded of the moment in the work of the Davies committee when we decided to find out what the public think and carry out a public opinion poll. A senior BBC executive rang the Department for Culture, Media and Sport, saying, "You have to stop them doing that; they won't know the right questions to ask". This time the BBC has been much more open in the debate, which I welcome.
	The committee chaired by the noble Lord, Lord Fowler, has made a number of criticisms of the process, some of which I wholly agree with. I strongly agree with what it said about the role of the NAO. I am disappointed that the noble Baroness, Lady Deech, did not indicate that today the BBC is deviating from its, "We'll die in the last ditch" opposition to the NAO, moving it back a trench at a time, with the line eventually crumbling after a long, hard pounding on the way.
	I am not quite as sure about the role for Parliament, recommended by the noble Lord, Lord Fowler. I am inclined to think that the Government should make proposals and answer to the country for those proposals. I believe that there is a touch of the Mandy Rice-Davies about the report of the noble Lord, Lord Fowler: "We are parliamentarians. We would, wouldn't we?".
	I have two reservations about the process, one of which is serious. It is very disappointing that the licence fee decision has been put back until after the Summer Recess and, therefore, is separated from the decision on all the other matters. Those two issues are intrinsically interlinked and they should be dealt with together. My second reservation is more a fear. At the end of the Davies committee process—it was not a bad process, although not as good as this—there was a stitch-up between the Secretary of State, the Chancellor of the Exchequer and the Prime Minister, which was never adequately explained to the public. When reaching conclusions on the charter and, more importantly, on the licence fee, the Government owe a full explanation of precisely how they got there and not just an assertion that X is the figure and Y is the charter.
	My second point concerns the charter and, in particular, the relationship between the new trust and the executive replacing the governors. This was strongly criticised by the noble Lords, Lord Clement-Jones and Lord King, and I do not disagree with much of what they said. The noble Lord, Lord King, rightly said that nobody much supports these new arrangements, and he read out a whole list of people. But, as he did so, there were two categories of people; those wanted to go very much further than the Government are going and those who wanted the status quo. That is why the Government have alighted on this particular compromise.
	I think that the previous position was completely indefensible. The only people I know who defend it are some former governors. The Davies committee said that the position of the governors is "problematical"—some of us would have put it more strongly—so there had to be change. But, on the whole, I accept that there is a good case for the evolutionary change we are now seeing. It may not, as many noble Lords have said, stand the test of time. We may need a further change. I am quite open to that. But a further change at this point would have been over the BBC's dead body, whereas what we have at least, more or less, has its acquiescence. I must say that if anybody can make this arrangement work, the BBC will. An extraordinary combination of inflexibility and flexibility makes it a world-class institution. I think that this has at least enough of a chance to be worth having a go with. So, while I accept that in logic it does not have a lot to be said for it, in practice it may have rather more.
	I turn to the licence fee. Of the two broad decisions around us, the licence fee is the more important. In asking what is going to stop the BBC doing something that perhaps it should not do, and in thinking of the Ofcom process, the public value test and the trustees, my own long experience is that it finds a way around those things. That was certainly true with BBC3, which the Secretary of State resisted. The BBC signed up to change its original proposals. If anyone can explain to me the difference between BBC3 as we have it and BBC3 as originally proposed by the governors, I should be delighted to hear.
	The thing that stops the BBC doing too much is shortage of money. You have to get the amount of money right for what it should be doing and not give it so much that it starts doing all sorts of thing—"sufficiency without excess" was the Davies committee's undramatic description of what you are after.
	Last time around the BBC got a pretty full settlement. It received RPI plus 1.5 per cent, much less than it bid for but a pretty full settlement. There are many things I could give in evidence of that, but the main thing was the huge increase in staff—23,640 in the year 2000 when the settlement was reached and 27,000 in 2004–05 when Mr Dyke left the corporation. The PKF report suggests that it failed to deliver on efficiency. I see signs that it may already be reckoning that it will get an awful lot of money this time around. The recent revelations about the—I am sorry, I am old Labour—really obscene figures being paid to certain presenters by the BBC suggests to me that perhaps it is being given a bit too much.
	I do not know whether it is true, but yesterday I read in the newspaper that the BBC is thinking of starting a current affairs magazine. If that is so, it is certainly being given too much money. That is not the role of the British Broadcasting Corporation in any sense. So I think that the Secretary of State is right to describe the BBC's bid as an opening bid and will be right to finesse it down. But not too far because in the present broadcasting environment there ain't nobody but the BBC to do certainly kinds of things. The noble Baroness, Lady Bonham-Carter, knows very well the ground-lapping Norma Percy programmes such as "Death of Yugoslavia" and "Elusive Peace", and there is a whole list of them. Nobody in Britain but the BBC will commission such programmes. To me, they are more than just wonders to watch; they are treasures of our national history and show what television can do in communicating.
	So it must have enough money to do things like that and to continue to be at the forefront technologically, which is an incredible strength of the BBC. If anyone had said that a nationalised industry would be at the forefront technologically, one would have doubted it, but the BBC has managed that time and again. Its changeover to the digital revolution has been quite extraordinary. I do not know why we are having digital switchover, but the BBC will make a contribution there, whether or not we think that it should pay for it. So while must have enough money for that, I have some worries about it having too much money. I worry about crowding the private sector and that there can be an incipient imperialism in the BBC which thinks that it must conquer everything.
	Getting that balance right is extraordinarily tricky. Personally, I think that it may sometimes be right to make minor adjustments to the licence fee settlement during the course of five and 10-year periods, depending on what has emerged, although we must be careful about that because the BBC must have reasonable scope to plan.
	However, I share the worry of my noble friend Lord Bragg that if you give the BBC too much money when ITV is struggling, ITV will abandon its public service remit, which would be a great tragedy. The BBC is trying to have it both ways here: when ITV is doing very well from advertising revenue, it says, "You must give us lots more licence fee so that we can compete with it in spending money on programmes"; when ITV is doing very badly, it says, "You must give us lots more licence fee because ITV cannot do it any more, so we must do it all". That is the nature of the beast.
	I think that the answer to the ITV problem is not to cut back on the BBC, it is to deal with the problems of ITV. I would not mind a bit of contestability on some of the licence fee. The two big problems that ITV has, which could be dealt with reasonably easily, are the sum north of £100 million that it is still paying to the Government for its licences, which no longer have any justification in truth, and the conditions imposed at the time of the merger, in quite different market conditions, on how it can sell and price its advertising. If those two inhibitions were taken away, many of the problems to which my noble friend Lord Bragg rightly drew the attention of the House would be alleviated, at least for the time being. I would rather that that was done than that we end up in one of the most unhelpful rows, with our two public service broadcasters fighting with each other day and night about who should get what. I enter the view, which is a bit soft-hearted, that both could get something.
	As I said, the BBC is a great national institution. It is one of the relatively few British institutions that can rightly be described as world-class. Many others would die to have it. It has shown an extraordinary capacity to adapt during its history. Its ways are sometimes wily. Its conservatism—with a small "c", of course—is sometimes infuriating. Occasionally, the sheer weight of BBC briefing makes you long to rip its arguments to tiny shreds and throw them out of the window. But the truth is that even when it overdoes it in those ways, it does so out of a passionate belief in what it does. From our debate this afternoon, it has been clear that that passionate belief is shared by nearly every Member of your Lordships' House.
	I hope and believe that we can rely on the Secretary of State to settle the issues before her in a reasonably balanced way, and I hope that that will have the effect of leaving the BBC in a position where it can continue to do for us, for our children and for our grandchildren, the very great service that it does today.

Baroness Bonham-Carter of Yarnbury: My Lords, this has been an interesting and informative debate, although what we learned from the noble Lord, Lord Inglewood, about the fate of those who criticised the previous charter has made me a little nervous, so I shall start on a positive note.
	"There is nothing like a little distance to make you reflect on what makes Britain really great. Since I live in the United States for most of the time I can tell you that many is the time I wish deeply that there was a presence like that of the BBC".
	Clearly, those are not my words, as I am here, but those of historian Simon Schama, voicing a sentiment expressed by so many. The BBC's new charter and agreement recognise this, which is to be welcomed. Here, I declare an interest; I worked at the BBC for 10 very exciting years, and I am currently an associate of an independent production company.
	The digital future will mean that each consumer could have limitless choice. Profitability cannot be allowed to emerge as the sole measure of worth. The presence of the BBC, defined by the charter as serving the licence fee payer, placing the public interest first, and bringing the world to the UK, is an essential counterbalance to programme-making purely as a commodity. There is a ringing endorsement to be entertaining, and of course the BBC must entertain, but it also has to take on difficult subjects and not be damned if it does because they do not always attract large audiences.
	The Guardian recently ran a story about BBC1 having,
	"sunk to its lowest ever peak time ratings",
	on a night when "Panorama" was given a peak-time slot on a Wednesday. The Guardian said that "Panorama",
	"failed to woo the viewers".
	A forthcoming "Panorama" special was swiftly relegated from Wednesday to Sunday. The BBC must hold its nerve. The emphasis must, as the charter and the agreement say, be on quality, not on ratings.
	As the noble Lord, Lord King, has said, the process of the renewal of the charter was set against the backdrop of the unprecedented internal upheaval caused by the Hutton inquiry. The war in Iraq led not only to regime change there, but to regime change at the BBC, and relations between the Government and the corporation hit rock bottom. As the Minister said earlier, the dual role of the BBC board of governors, as both champions and regulators of the corporation, was exposed as untenable. At the time, the Secretary of State described the position of the 12 BBC governors as unsustainable, and said that it was,
	"probably the most fundamental area for reform".
	She has kept her word.
	The most radical element to the charter is the creation of the BBC Trust, but although the trust is clearly an improvement on what existed before, it is still not an independent regulator. We are told that the BBC Trust will have a line of accountability directly to the licence fee payer, and that it will be that strange hybrid, to which the noble Lord, Lord Ryder, referred, a sovereign state inside the BBC. Would it not be much more likely to achieve the stated aims of the Government if it was a sovereign state outside the BBC?
	As the noble Lord, Lord King, has mentioned, there is the matter of how the members of the trust are appointed. In the evidence that she gave to the House of Lords Select Committee, of which I was proud to be a member—I express my thanks to the noble Lord, Lord Fowler, our admirable chairman—the Secretary of State said:
	"I think the challenge is as much in the range of people that come forward and offer themselves for appointment as it is in relation to the appointment itself".
	At the same time, she acknowledged that this was a difficult task. How do the Government intend to ensure this and to get away from the old boys'/girls' network when the interview panel, as has been mentioned before, is chaired by a DCMS official, and when ultimately the appointments are made by the Secretary of State? I have noticed that three ex-governors have talked today in this House. There may be a chicken and egg discussion to be had there, but surely there should be an independent oversight of appointments.
	Again, in her evidence to the House of Lords Select Committee, the Secretary of State said—I am quoting what the noble Baroness, Lady Gibson, said, but in a slightly different context:
	"I think what is important is that those who are appointed to the Trust reflect the new nature of the BBC Trust, the fact that it is different from the Board of Governors".
	Yet three existing governors are to be transferred to the trust. The Minister says that there is a need for continuity, but surely the trust is absolutely not about continuity; it is about being a new broom—a new body with a new function that will stand back from the corporation and represent a break with the past. Continuity lies in the hands of the executive board, the channel controllers and the programme makers. These appointments fly in the face of the Secretary of State's stated aim that the BBC Trust should have a new nature. New nature simply is not compatible with old governance.
	That the BBC is to continue to be funded through the licence fee is, as my noble friend Lord Clement-Jones said, to be welcomed. However, the level at which the BBC wishes it to be set is causing some consternation both among competitors and supporters. The director-general of the BBC, Mark Thompson, contends that at the end of two years of public debate, the BBC must be given the finances to deliver the mission that emerged out of it. He refers to:
	"This piece of settled public policy".
	I am not sure how he comes to the term "settled", although certainly there was wide consultation, for which process the Government are to be congratulated. But I do not believe that the public understood that the BBC, through its licence fees, was going to be asked to bear the social costs of help for the vulnerable and elderly in the switch to digital. The Secretary of State's view is that a targeted assistance programme is a broadcasting cost. The noble Lord, Lord Fowler, and the right reverend Prelate the Bishop of Manchester have already spoken on this: it is not; it is a social cost and it is not appropriate for the licence fee to be used to pay a social cost. This is in effect a new tax collected through the disguise of the licence fee, and it inflates the cost for every licence fee payer.
	At the moment there is strong support for the BBC and the way it is funded, but the public's faith in the corporation will be put under severe strain if at the same time as channels and choice multiply, the cost of the licence fee rockets, and I too accept the report of Professor Barwise. But he has done that research now and we are talking about what will happen as channels multiply. The rise in the cost of the licence fee is due in part to the targeted assistance programme I just mentioned, but to an even greater extent to the Government's insistence that the BBC—in other words, the licence fee payer—funds the Government's policy of switching to digital. Why should the cost of switching from analogue to digital be paid out of the licence fee and not general taxation? The licence fee is already a regressive tax and this makes it more so.
	Another cost factored into the BBC's licence fee bid is that of digital spectrum. The Treasury is set to make a lot of money out of selling spectrum, and if it were to charge the BBC, it would be in direct receipt of licence fee payers' money. It would be indulging in what the noble Lord, Lord Puttnam, called in evidence to the committee "double dipping". This should not happen.
	The process of charter review at a time of great change across the broadcasting industry has made apparent the importance of securing a strong BBC, but not an omnipotent one. That is why the window of creative competition, as outlined in the agreement, is such a welcome concept. It recognises that content is going to be all-important in a world of multiple channels and that the licence fee must be used to finance the best ideas and the best talent to provide that content. The right reverend Prelate the Bishop of Manchester expressed some concern, but I know the BBC and I do not think he need be worried. I welcome the emphasis placed in the agreement that the WOCC system be run in a fair and transparent way.
	A healthy, vibrant and competitive PSB ecology must be ensured in a future that poses particular challenges to public service broadcasting. Here, the noble Lord, Lord Bragg, has already been characteristically persuasive. The Government should use their power of direction to instruct Ofcom not to charge PSB channels as well as the BBC for the use of digital spectrum. If the licence fee payer, through the BBC, is to fund switchover, it is also to be welcomed that the Government are encouraging the BBC to discuss the assistance it might offer Channel 4—here I echo the words of my noble friend Lord Clement-Jones—in funding its capital costs of switchover.
	During this charter review, there has indeed been public consultation, an independent report and three Select Committees. The Government have not had to listen to any of their recommendations. The Secretary of State herself told the House of Lords committee that the Green Paper was:
	"Deliberately framed in a way that was a bit like a pistachio ripple: there were some white proposals which had White Paper status".
	In other words, what we said on certain matters would not even be considered. Parliament, like the public, is only consulted. As the noble Lord, Lord Dubs, said, all we can do is talk. The Royal Charter is a deal between the Secretary of State and the chair of the BBC; between the Government and the BBC.
	Those people who are concerned about greater parliamentary involvement must remember that at the moment we have a Government who are well disposed towards the BBC. That will not necessarily always be the case. As the noble Lord, Lord Fowler, said so eloquently, Parliament must be given a greater role. The BBC should be established by statute so that its constitution is subject to parliamentary scrutiny, and Parliament should be able to decide the level of the licence fee.
	When the BBC's Royal Charter next comes up for renewal in 10 years' time, the broadcasting landscape, as we all know now, will look very different indeed. In the mean time, we must cherish the BBC. I opened this speech by quoting Simon Schama and I will close with him. The future must not be what he experiences in America, where:
	"It's impossible to imagine . . . anything like the take no prisoners irreverence of Jeremy Paxman on Newsnight"—
	which, I suspect, is something the noble Lord, Lord Gould, might desire—
	"it's impossible to imagine the kind of powerful and wildly eccentric satire . . . that we saw in Little Britain, it's impossible to imagine the scale and depth and beauty of something like the dramatisation of Bleak House".
	The BBC is a great institution. I agree with the noble Lord, Lord Judd, that we must ensure that this charter's endorsement of a strong BBC, a BBC independent of government and a BBC responsive to public wishes is the reality over the next 10 years.

Lord Luke: My Lords, I start by sharing with my noble friend Lord Fowler his disappointment that so few, if any, of his excellent committee's recommendations—or, indeed, the recommendations of other bodies, such as the House of Commons Select Committee on Culture, Media and Sport—were listened to, let alone acted upon. As usual, his speech was most articulate and very much to the point. I also congratulate my noble friends Lord King and Lord Inglewood on their perceptive contributions to the debate.
	It seems extraordinary that a Government who so frequently claim to be listening have taken such an obstinate and intransigent stance on the committee's proposals for establishing the BBC Trust. Indeed, I cannot do better than repeat the words of the right reverend Prelate the Bishop of Manchester when he said that the Government display a remarkable capacity for being immovable. That is a wonderful Churchillian phrase.
	The BBC is one of the great institutions of this country, giving people across the United Kingdom and all over the world an opportunity to watch and listen to a quality of programming which is far above what would otherwise be available. However, the BBC's deservedly fine reputation does not mean that the taxpayer should continue to pour enormous sums of money into it without asking very serious questions about how it is spent. The debate over how high the licence fee should be has degenerated into a morass of confusion, contradictory statements and half-answered questions.
	The announcement by Tessa Jowell to delay the decision failed to give any proper explanation for this. Leaving aside the question of whether a garden party was an appropriate place to make an announcement about something which will affect so many people, can the Minister clarify exactly why this delay was thought to be necessary and what is hoped to be achieved by it? I also hope that he can assure us that the decision will not be announced during the Summer Recess.
	There are several more questions that need answering about the licence fee. All highlight the importance of improving the transparency and parliamentary scrutiny of the process. The current method of fixing the licence fee is so secretive that it is not surprising that there has been such strong criticism of the requested increase. The final level should be set after a debate based upon clear and publicly scrutinised figures, rather than the current hotchpotch of a process.
	It is completely unclear upon what basis the decision will finally be made. The calculations that have gone into drawing it up appear opaque at best and downright wrong at worst. Notably, one of our leading accountancy firms, PKF, has expressed serious doubts as to the accuracy of the figures. Can the Minister assure us that its criticisms will be taken into account in revising the estimated costs of the BBC, and that the adjusted figures will be released to the public before a final decision is made?
	Does the Minister agree that the National Audit Office should have a role in overseeing the calculations, as I understand that the licence fee is now classified as a tax? The BBC's request for such an enormous increase in the licence fee is doubly surprising when one considers the growth in the number of households served. The BBC has already benefited from these new households, and is looking set to continue to benefit from future increases in household numbers. Has this been taken into account by the BBC or the Department for Culture, Media and Sport?
	The confusion continues when we look at how the money is to be spent. We know that £300 million will go straight into the Chancellor's pocket to pay for the digital spectrum, a clear example of yet another stealth tax, this time to be hidden in the licence fee. Can the Minister explain exactly why television licences for the over-75s are paid for out of taxpayers' money, but the cost of the digital switchover—including providing coverage for the vulnerable and those self-same over-75s—are to be paid out of the licence fee? What are the reasons for such a fundamental and illogical difference in the source of funding?
	My Lords, the licence fee is only one of the areas that needs to be properly debated. Perhaps the most important is how we define public sector broadcasting in the 21st century. What do we mean by it? Does it mean competing in every sector? Is the BBC in danger, despite its protestations, of putting audience share ahead of audience reach? While the BBC should be congratulated on its continuing commitment, it is not the only broadcaster with public sector commitments. The importance of maintaining sufficient competition in this area was set out by the noble Lord, Lord Birt, in his evidence to the third report of the Select Committee.
	It is extraordinary that we now seem to be debating the level of the licence fee completely separately from the debate over what the BBC should be aiming to provide. The BBC's requirements to provide public sector broadcasting are discussed separately from those of ITV or Channel 4. This incoherence must surely be resolved. The reviews of ITV and Channel 4 should be conducted simultaneously, later this year.
	As we have already heard in this debate, there is a great deal of worry about the effects on the independent sector of the increase of £6 billion pounds that the BBC has asked for over the period. The other television channels and radio stations that are funded mainly by advertising will face massively increased licence-fee funded competition over the years. There are also concerns about how the BBC's handling of digital switchover will affect the commercial channels. I understand that the BBC is in talks with Channel 4 about providing help with the capital costs of switchover and some additional digital terrestrial capacity. The Minister mentioned this is his speech, but can he reassure me that the discussions will result in concrete measures to help Channel 4 in these areas, as promised in the White Paper?
	Concerns about maintaining sufficient competition and diversity among the media are not confined to television. Commercial radio, too, sees the BBC increasing its share by alternating popular radio shows during the day with programmes that fulfil its public service requirements, other than news, weather and travel, through the night. It is clear that the public sector debate must therefore be extended into all areas covered by the BBC, including the internet and downloads.
	I hope that the Minister will be able to answer my questions and those asked by other noble Lords to ensure that the charter and agreement receive some small part of the proper parliamentary scrutiny that is quite clearly essential.

Lord King of Bridgwater: My Lords, I was a member of the Nolan committee when we set up some of these principles. One of the key points that the Nolan committee consistently made was that it is not just what people decide to do but what is seen to be done and what the public perception is. If one of the trustees who was appointed happened to be a personal acquaintance of the Prime Minister or some other member of the Government, and if it was then revealed that the appointment was made by the Secretary of State having been advised by one of her senior civil servants and the chairman of the BBC, does the Minister think that he would be better able to defend the position than if the appointments had been recommended by an independent group of people against which the allegations could not be nearly so easily sustained?

Lord Addington: My Lords, one must admire the tenacity of the noble Lord, Lord Beaumont. He is one of those people who has learned that great lesson about parliamentary procedure; if you want something to be discussed, you must be prepared to come back again and again.
	But, I am afraid, since we last discussed this matter in, I believe, February, my attitude against his measure is slightly hardening. He mentioned hospitals. My experience of hospitals has been in common with that of sportsmen over many years—those hours of sitting in casualty on a Saturday or a Sunday, with mud drying on you, with sports kit that is becoming clammier and more unpleasant by the minute, waiting to have, say, a couple of stitches inserted into a cut or a test to see if a sprain is actually a small break, and so on.
	The main problem for people in that position is boredom—hours of boredom. I will not address the Government about response times in hospitals, because I presume that it ain't that bad. If someone comes in who has been in a car crash, they go in front of you—as they should do. But you will sit there and you will wait. And that is quite eerie, if you are waiting in silence, hearing every groan, bump and crash that rings around that hospital. You start to worry and imagine. I am describing a comparatively healthy person who knows that he needs three or four stitches in a cut on the knee.
	For someone who is worried, I should imagine that taking their mind off things with a little bit of light music is probably a good idea. Also, having a television screen on which to concentrate is not that bad an idea—it will irritate some but relax others. Thus, there is an element of balance in this.
	Which of the two is the more objectionable in the long term? I do not know. As a disability spokesman, I think that my connections with people who have hearing problems and other disabilities are pretty good. I have heard nothing from those groups that leads me to think that this is a major problem. So I suggest that the noble Lord is slightly overplaying that card.
	We can carry on going into this matter but there are other examples of where piped music, or a version of it, has been found to be quite useful. I refer to the Australian version in which Barry Manilow was played in the background and this drove away kids from street corners where they had been worrying everyone. The idea of Mantovani and Barry Manilow driving people with ASBOs from our streets is wonderful: it might be a price worth paying. Indeed, the noble Lord, Lord Skidelsky, provided a wonderful example of another ultimate use of background or broadcast music. Apparently in pro-communist-inspired demonstrations in Hong Kong, dance music was played and the demonstrators started to dance. I have only the noble Lord's word for it but he is a man whose accuracy I would never doubt. The image of music inspiring mobs to start dancing on the streets is one that makes me feel slightly positive about broadcast music.
	Effectively, the noble Lord, Lord Beaumont, is talking about a minor irritant. Some people believe that inappropriate noise will drive you round the bend but that is not the case. If you concentrate on something else, it disappears. If you concentrate on a conversation in a restaurant, the background music will not bother you, provided that its level is not too high—but, there again, you can always take your trade away. Provided that the level of music in these situations is correctly set and, where possible, you can move away from it, I do not think that it will do a great deal of damage.
	Television sets on short-haul trains probably provide a great way of stopping you dozing off and missing your stop, apart from anything else, provided that their noise level does not get in the way of station announcements. Speaking with my disability hat on, I think that I have given the government Front Bench a little trouble at times in ensuring that those announcements meet minimum requirements. So long as no background noise impinges upon them, I cannot see what the noble Lord's Bill will achieve. I am sure that the noble Lord, Lord Beaumont, will carry on with this issue, and I am sure that it is good to draw attention to the fact that it must be sensitively handled. However, I do not think that the Bill is appropriate.

Lord Beaumont of Whitley: My Lords, I am disappointed with the reception of my Bill, especially from the noble Lord, Lord Addington, who totally missed the points raised by the World Health Organisation, which I cited at some length, and the whole question about people who really suffer as a result, especially from tinnitus. No one has dealt with that point.
	No one has really answered the point about the people who are really hurt by this. I referred earlier to the person to whom I spoke this morning, whose husband had died while television was on at full blast in a ward. I cannot imagine what the hospital was about. No doubt, over time, we will deal with that without legislation. I certainly do not think, as the Minister said, that the spread of piped music is inevitable. Although it is driven by hard commercial powers, it will probably be on the way out because so many people dislike it—the Gatwick example cited by at least two speakers is a very good one and there are others.—[Interruption.]
	Did I hear obtrusive music? I did, did I not? After that, I do not have much more to say, except to thank the noble Lord, Lord Luke, who spoke from the Conservative Bench, who took a number of my points very seriously.
	I would like your Lordships to give the Bill a Second Reading, so that it can be ironed out in Committee. If we do so, we can meet a number of the objections. I am not myself entirely certain about the long-distance travel provision. I am much more concerned about hospitals, waiting rooms and the sick. I think that that is a case where the state should intervene. I ask the House to give the Bill a Second Reading so that we may proceed a little further to explore the whole matter.
	On Question, Bill read a second time.